September 2021
Maddalena Honorati Alicia Marguerie
Opportunities Opportunities and Challengesand Challenges
YOUTH EMPLOYMENT IN UZBEKISTAN
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© 2021 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.
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Contents
Acknowledgments ........................................................................................................................................ vi
Acronyms .................................................................................................................................................... vii
Executive Summary .................................................................................................................................... viii
1. Introduction .......................................................................................................................................... 1
2. A snapshot of the labor market ............................................................................................................ 7
3. Youth aspirations and perceived constraints to employment ............................................................ 20
Aspirations for wage jobs and perceived constraints ......................................................................... 21
Aspirations for entrepreneurship and perceived constraints ............................................................. 25
Discouragement .................................................................................................................................. 28
4. Recruiting youth: What do employers look for? What do youth look for? ........................................ 29
Challenges in recruiting young workers .............................................................................................. 29
Job search channels for youth and employers ................................................................................... 34
5. Youth at work: What can be improved? ............................................................................................. 39
Where do we find youth at work? ...................................................................................................... 39
Turnover of youth................................................................................................................................ 44
Skills gaps and shortages among young workers ................................................................................ 46
6. COVID‐19 pandemic impacts on the workforce ................................................................................. 51
7. The role of institutions to promote youth employment .................................................................... 54
The role of Public Employment Services ............................................................................................. 54
Programs supporting youth employment ........................................................................................... 55
The use of public employment services and programs ...................................................................... 61
Labor market and educational information systems .......................................................................... 64
8. Building an effective youth employment policy ................................................................................. 66
Summary of findings ........................................................................................................................... 66
Recommendations .............................................................................................................................. 70
A Sequenced Approach: The short and medium term ....................................................................... 71
Annex 1: Youth Focus groups discussion methodology .............................................................................. 78
Annex 2: Employer phone survey methodology ......................................................................................... 81
References .................................................................................................................................................. 86
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List of Tables
Table 1 : Labor market outcomes by level of education and gender ......................................................... 13
Table 2 : Coverage of employment programs and services ........................................................................ 57
Table 3 : A1. Summary of FGD participants ................................................................................................ 80
Table 4 : A2. Summary of KII participants ................................................................................................... 80
Table 5 : Distribution of the firm sample provided to the survey firm ....................................................... 82
Table 6 : Response and non‐response rate of the firm phone survey ........................................................ 83
Table 7 : Distribution of the final interviewed sample and response rates ................................................ 84
List of Figures
Figure 1: Uzbekistan population is young and will remain so in the next 30 years ...................................... 7
Figure 2 : Labor force participation rate in Uzbekistan and selected countries (15+ years) ........................ 9
Figure 3 : Labor force participation and unemployment rates by gender and age (%) .............................. 10
Figure 4 : Reasons for inactivity by gender and age (%) ............................................................................. 10
Figure 5 : Labor discouragement rate among 15‐24 years old ................................................................... 11
Figure 6 : NEET rates, selected comparator countries ................................................................................ 12
Figure 7 : Educational structure of employment and unemployment ....................................................... 15
Figure 8 : Tertiary education attainment in the ECA Region ...................................................................... 16
Figure 9 : Unemployment rate by region and age group (%) ..................................................................... 17
Figure 10 : Incidence of labor migration, 2018‐2020 (%) ........................................................................... 19
Figure 11 : Young workers are vulnerable to low wages ............................................................................ 22
Figure 12: Constraints faced by firms when hiring young workers (% firms reporting the constraint) ..... 29
Figure 13 : Reason for rejecting job applications by young candidates (% firms) ...................................... 30
Figure 14 : Perceived labor‐related constraints to firm growth (% firms reporting the constraint as
important or severe) ................................................................................................................................... 32
Figure 15 : Reported strength of young workers (% firms) ........................................................................ 34
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Figure 16 : Recruitment channels used by employers, size of firms, and region (% firms reporting using
this channel) ................................................................................................................................................ 36
Figure 17 : Recruitment channels used by employers by sector (% firms reporting using this channel) ... 37
Figure 18: Share of young workers in the workforce, by type of firm, size, region, and sector (% firms) . 40
Figure 19 : Distribution of the youth workforce across regions, size of firms, and sectors ....................... 41
Figure 20 : Women in firms' workforce (share of workers and total number) ........................................... 42
Figure 21 : Share of women in the workforce by occupation (%) .............................................................. 43
Figure 22: Reasons for dismissal of young workers (% firms with young workers) .................................... 45
Figure 23 : Technical skills lacking among young workers, by firm type and sector (% firms reporting the
skill is lacking) .............................................................................................................................................. 47
Figure 24: Soft skills lacking among young workers (% firms reporting the skill is lacking) ....................... 48
Figure 25 : Training provided to all workers in general, and to young workers (% firms reporting
providing training)....................................................................................................................................... 49
Figure 26: Type of training (formal and informal) provided by firms to workers (all workers) (% firms) .. 50
Figure 27 : Share of workforce employment affected by COVID‐19 pandemic ......................................... 52
Figure 28 : Firms recruiting before and after the pandemic started (% of firms reporting to recruit at
least one person) ........................................................................................................................................ 53
Figure 29 : Interactions between firms and Employment Support Centers ............................................... 62
Figure 30 : Key labor market challenges specific to youth ......................................................................... 69
Figure 31 : Summary of proposed actions .................................................................................................. 77
List of Boxes
Box 1: Main data sources used in the report ................................................................................................ 6
Box 2: Occupational and mobility barriers to labor market entry .............................................................. 13
Box 3: Subsidized microloans and access to capital for entrepreneurs ..................................................... 27
Box 4: Firms' taxes constraints and 2019 Tax reform ................................................................................. 30
Box 5: Women at work ............................................................................................................................... 42
Box 6: Are firms with women in management positions different from others? ...................................... 44
Box 7: The draft Labor Code ....................................................................................................................... 69
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Acknowledgments
This report was written by Maddalena Honorati and Alicia Marguerie based on the report “Qualitative
analysis of youth aspirations, job search efforts and discouragement in Uzbekistan” produced by RB Asia
and on firm level data collected through a phone survey by Ekspert Fikri, LLC, Center for Social and
Marketing Research. Roberto Sormani provided significant contributions to the design of both the
qualitative data with youth and the quantitative survey with firms. Olga Kupets provided excellent
research assistance in the analysis of the Household Budget Survey and Listen to Citizen of Uzbekistan
high frequency survey data. Kakhramon Yusupov coordinated the firm survey and youth qualitative data
collection process with the Ministry of Employment and Labor Relations, and Eva K. Ngegba provided
overall assistance. The team is grateful to peer reviewers Husein Abdul‐Hamid, Syud Amer Ahmed, Namita
Datta, and William Seitz. Valuable comments have been provided by Cem Mete, Susanna Hayrapetyan,
Vinayakraj Nagaraj, Marina Novikova, Nodira Meliboeva, and Elia Boe. The report benefited from the
overall guidance of Cem Mete and Marco Mantovanelli.
The team is enormously grateful to the Ministry of Employment Relations and Labor for providing detailed
comments. The team is grateful to Shoista Zakirova for supporting the organization of virtual workshops
to present and discuss the preliminary findings of the analysis in July 2020 and February 2021,
respectively. Valuable feedback was received from workshop participants, including representatives from
the Ministry of Employment and Labor Relations. The team is grateful to the State Statistical Committee
of the Republic of Uzbekistan for sharing the Household Budget Survey 2017 data, as well as the Ministry
of Employment Relations and Labor, the Agency for External Labor Migration under the Ministry of
Employment Relations and Labor and the Agency for Youth Affairs for sharing detailed data on active labor
market and related youth employment programs The team is grateful to Lyra Zaynilova and Ahror
Abdurakhmonov for their support in collecting this data.
The Social Protection and Jobs team of the World Bank wishes to recognize the generous award of a grant
from the World Bank’s Rapid Social Response and Adaptive and Dynamic Social Protection Trust Fund
Umbrella Program, which is supported by the Russian Federation, United Kingdom, Norway, Sweden,
Australia, Denmark, and Bill & Melinda Gates Foundation without which this work would not have been
possible.
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Acronyms
ALMP Active Labor Market Program
EBRD European Bank for Reconstruction
FGD Focus Group Discussions
GDP Gross Domestic Product
HBS Household Budget Survey
ECA Europe and Central Asia
ESC Employment Support Center
EU European Union
ILO International Labor Organization
ILOSTAT ILO Department of Statistics
KII Key Informant Interview
L2CU Listening to Citizens of Uzbekistan
LFP Labor Force Participation
M&E Monitoring and Evaluation
MIS Management Information System
MELR Ministry of Employment Relations and Labor
NEET Not in Employment and Not in Education or Training
PIS Personal Income Tax
SOE State‐Owned Enterprise
SSSU State Committee of the Republic of Uzbekistan on Statistics
UNLS Unified National Labor System
UZS Uzbek Sum
VET Vocational Education and Training
Note: All dollar amounts are US dollars unless otherwise indicated.
viii
Executive Summary
Youth are both an opportunity and a challenge for economic development. There are several compelling
reasons to pay particular attention to youth1 employment. Partly, it is a numbers game. The increase in
the youth population is expected to peak in the coming 15‐20 years, making the question of helping youth
transition into productive employment a particularly timely issue. But there are other reasons why youth
employment is an important policy issue, and plenty of evidence that there are significant economic and
social gains to ensuring good job outcomes for young people and, conversely, very costly economic and
social losses to not getting it right. Moreover, the first job opportunity for young people matters,
impacting how career and income opportunities develop over a lifetime (Falco et al. 2014).
Jobs for youth and youth entrepreneurship are at the top of the development agenda in Uzbekistan.
The country has declared 2021 as the Year of Supporting Youth and Improving Population Health, a clear
demonstration of the attention paid to youth. The government’s youth policy has two major directions:
provide modern education and ensure the employment of young people. The number of universities has
increased and the quota for admission to higher education institutions has more than doubled over the
past five years. In addition to existing active labor market programs, new measures to promote youth
employment and entrepreneurship have been introduced in the past year, including wage subsidies for
youth, subsidized internships in firms for vocational education training (VET) students, concessional loans
for entrepreneurial projects, and investment in youth techno parks.
Youth employment is a complex agenda because young people make up a diverse population that
requires different kinds of support. Young rural and urban residents, girls and boys, early school dropouts
and university graduates have different profiles and face different opportunities and constraints. In a
standard labor market analysis, the 15‐24 age group is generally the conventional definition of youth.
However, in Uzbekistan, as in many other countries, youth is generally understood to include the next age
cohort, up until 29 and 35 years of age.
Youth employment is not a one‐dimensional challenge. Addressing it will require attention to the quality
of general education and vocational training to improve young people’s skills and productivity, creating
incentives to participate in the labor market and reduce discouragement, while also removing current
regulatory obstacles to labor market entry (licensing and certification requirements) and business climate
obstacles that hinder progress in the development of a competitive private sector, productive agriculture,
and entrepreneurship. The latter, which relates to labor demand constraints, is less discussed in this
report, which focuses on labor supply challenges.
Uzbekistan is transitioning into a market economy, but the economy is not yet creating enough good
jobs for new labor market entrants. Reforms are ongoing to increase the competitiveness and access to
1 Youth is generally defined in this report as those age 15‐24 or 15‐29. However, many youth interventions target older or broader age groups, as well (age 25‐34 or even age 15‐39).
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finance and to selectively privatize and restructure SOEs. Nonetheless, the transition will take time and
the private sector is still very small, especially in the service sector.
The objective of the report is to assess and find potential solutions to the challenges youth face when
transitioning from school to work with a focus on labor market “supply side” reforms that are relevant
to improve the employability of youth. We recognize that rural and urban investment climates,
regulatory frameworks, taxation systems, overall macro‐economic frameworks, and human capital
(education and training policy, basic health) are prerequisites for many interventions on the demand side
of the labor market to be successful.2 The report provides a holistic assessment, including both demand‐
and supply‐side constraints, triangulating findings from available qualitative and quantitative data on
youth and employers. It inevitably documents an extensive set of issues. However, it does not aim to
assess the broader investment climate and macro context or all firm‐level constraints to job creation as a
full job diagnostic would do. The lack of jobs and slow labor demand are found to be major constraints to
youth employment, but macro and structural constraints to job creation are not assessed in the report in
depth. The scope of the policy recommendations put forth focus on labor market reforms that could
improve the employability of youth and are meant to complement recommendations on a broader set of
macro and business environment reforms aimed at enabling private firms to start up, grow, and create
jobs. Until major constraints to labor demand are addressed and job creation picks up, the
recommendations presented in the report will remain necessary but will not be sufficient to address the
youth employment challenge.
The analysis presented in the report is based on multiple data sources. Key labor market indicators for
discouragement and migration patterns are estimated based on available household survey data
(Household Budget Survey (HBS) 2017 by the State Statistical Committee and the Listening to Citizens of
Uzbekistan 2018 collected by the World Bank). The analysis of youth aspirations and constraints to
employment is based on newly collected data for this report, including: (i) qualitative data from focus
group discussions with youth (unemployed, inactive recent graduate students, and young workers), (ii)
key informant interviews with representatives of Employment Support Center, Youth Union, Chamber of
Commerce, Ministry of Employment Relations (MELR) Training Centers, secondary and post‐secondary
schools, mahallas committees, specialists on career guidance at college, and regional branches of the
Agency for External Labor Migration (see annex 1 for more details); and (iii) representative quantitative
data from a phone survey on firms in the formal (mostly private) sector, designed to assess key challenges
to hire youth, employers’ perceived technical and socioemotional skills gaps, and feedback on their young
workers in the workforce (see annex 2 for more details).
Uzbekistan’s growing working‐age population represents a major opportunity to reduce poverty and to
increase shared prosperity. Uzbekistan has the largest pool of youth in absolute numbers in the Europe
and Central Asia (ECA) Region, with 15 million youth up to age 24 years (18 million up to age 29 years).3
The working‐age population is expected to increase by 12 percent in the next ten years, the third highest
2 World Bank. Uzbekistan Country Economic Memorandum and Systematic Country Diagnostic, forthcoming. 3 The data reported is 2020 estimates (UN 2019, accessed May 2021).
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population growth in ECA after Tajikistan and Kyrgyzstan.4 In 2020,5 about 535,000 youth graduated from
vocational colleges and higher education institutes and were looking for first‐time job opportunities.
The labor force participation rate in Uzbekistan compares favorably with comparator countries;
however, the gender gap compares unfavorably among other upper‐middle‐income countries,
especially among youth. According to HBS 2017, 61 percent of individuals 16 years and older participate
in the labor force, of whom over 56 percent are employed. Less than half of all women 16 years and older
are active in the labor market (47 percent) as opposed to three‐quarters of all men (75 percent). Low
participation of women in the labor force is often due to gender‐related stereotypes and social norms.
Inactivity rates and discouragement are high among youth mostly due to social norms, low wages, and
limited “formal” job opportunities (in addition to unmet aspirations). Youth unemployment rates are,
as a rule, considerably higher than those of older workers. Youth unemployment and discouragement are
attributed to a lack of experience and skills mismatch. Youth who are not in employment, education, or
training (commonly referred as “NEETs”) represent 24 percent of age 16‐24 and 26.4 percent of age 16‐
29.6 The share of youth who are “discouraged”7 reaches 5 percent of age 15‐24, compared to less than
2.5 percent in most neighboring ECA countries; it declines to 4 percent of age 25‐29. Low levels of
formalization and scarce opportunities for wage employment are among the top impediments for youth
wage employment. Most youth who participated in the focus group discussions noted that they are hired
without formal registration and without opening an “employment record book”.
The NEET gender gap in Uzbekistan is the highest in the ECA Region. The NEET rate for young women is
four times larger than the NEET rate for young men. About 38.2 percent of women age 16‐24 were NEET
in 2017, compared to only 9.4 percent of men in the same age group—a gap of 29 percentage points. For
the wider group (age 16‐29), the gap narrows to 18 percentage points, with 44 percent of women jobless,
not in education, and not looking for work, compared to 8.5 percent of men.
Labor migration plays an important role in shaping the labor market outcomes of youth, especially in
depressed labor market areas. The qualitative evidence collected through focus group discussions with
youth shows that local labor conditions, mostly low‐wage and informal work, push unemployed youth to
consider international migration as almost the only option to work and earn decent wages. About 5.5
percent of individuals aged 16 and above are international labor migrants. The bulk of labor migrants are
age 25‐34 and the very large majority of migrants (about 90 percent) are men. Russia is the major
destination for Uzbek labor migrants. Kazakhstan is the second destination for the total population and
for men; Turkey is the third destination. Internal migration happens at a much lower scale as wages in
Tashkent are less attractive than migrating abroad and the cost of living is higher than in the regions.
4 Between 2020 and 2023, the working‐age population is expected to increase in Tajikistan and Kyrgyzstan 22 and 14%, respectively (UN 2019). 5 If we add graduates from lyceums, there were 582,000 graduates in 2020. 6 The computed rate applies to youth age 16‐24 (or 16‐29), based on HBS 2017. 7 ILOSTAT defines “discouragement“ as the phenomenon whereby people who are willing to work are out of the
labor force because they believe that jobs are not available for them. With the available data, we measure
discouragement based on the L2CU 2018 data as the share of working‐age individuals who are not employed and
not looking for a job (inactive) for either lack of employment, not knowing how to look for a job, too young, or too
old to work and who would be willing to work if a job or business opportunity became available (World Bank 2018).
xi
This analysis identifies key challenges to youth employment. The main employment challenges reported
by youth are the scarcity of jobs and weak labor demand in rural areas, high informality, and low wages.
These challenges require a multisectoral reform agenda, which is beyond the scope of recommendations
put forth in this report. Nonetheless, even considering the existing labor demand – which is not sufficient
to absorb all new labor market entrants – the following challenges have been identified: (i) the mismatch
between the technical skills taught at the formal general education system, post‐secondary VET, and
professional training and the skills demanded by employers; (ii) the limited provision of business and
entrepreneurial skills conducive to start up successful microenterprises; (iii) limited access to higher
education; (iv) poor labor market information and absence of career guidance at school (with the
exception of an handful of schools) to inform education and occupational choices; (v) strong social
stereotypes holding participation of women in the labor force; (vi) small scale of active labor market
programs for youth compared to the needs; (vii) limited awareness and use of public employment services
and programs; (viii) sectoral and geographical mobility barriers; and (ix) weak monitoring data and
evaluations culture to identify public interventions successful at improving youth employment.
Both youth and employers attest to the large skills mismatches and skills gaps and their effect on hiring
and job satisfaction. Our firm survey and focus group discussions with youth provided evidence of skills
shortages and gaps. The low quality of technical skills provided through both the general education system
and the technical and vocational are recognized by both youth and employers. Employers and education
institutions are not sufficiently connected to ensure that curricula are adequate and transfer labor market‐
relevant skills. As a consequence, employers almost exclusively value work experience as post‐secondary
professional diplomas are not a certificate of relevant technical skills, leading to further penalization of
youth. Skills gaps are perceived especially for youth with vocational post‐secondary diplomas, which are
seen as outdated and not providing the needed technical competences. As a consequence, employers
look for higher education, tertiary education diplomas even for jobs requiring technical skills from
specialized professional training. On the other side, youth report severe barriers to enroll in universities,
given the limited number of universities and the prohibitive costs for all (for example, rural youth would
need to move to cities where the cost of living is much higher). Few firms provide training to compensate
for the lack of qualifications, and even fewer provide formal training, which restrains workforce
productivity.
Youth express high interest in starting up small businesses, but lack of skills and difficult access to start‐
up capital hinder access to sustainable self‐employment. According to interviewed youth and
representatives of the Chamber of Commerce, Employment Support Centers, and youth groups, the key
challenges to entrepreneurship include the lack of skills and training opportunities leading to weak
business plans; limited access to soft loans with concessional rates and lack of alternatives to access
capital; high competition with established firms; and limited local consumer markets in rural areas.
Market demand for graduates of tertiary education is high, yet access to tertiary education is limited.
The employment rate is the highest and the unemployment rate is the lowest among tertiary educated
youth compared to youth with lower education attainment. However, only 10.7 percent of youth aged
25‐34 have a university diploma, while two in three youth have a post‐secondary specialized technical
diploma, 23 percent have an upper secondary diploma (grade 11), and 2 percent have lower secondary
xii
education (grade 9) based on the HBS 2017.8 Uzbekistan has the lowest tertiary attainment rate of the
ECA Region. Youth who participated in our focus group discussions reported serious barriers to access
universities; some said they had tried to enroll for four consecutive years without success.
In addition, the few higher education graduates are misaligned with the needs of the labor market and
the relevance of economic sectors. In terms of the workforce, tertiary educated workers represent 12
percent of total workers. Workers with secondary and post‐secondary professional and vocational
qualifications (representing 61 percent of total workers) do not possess the technical and soft skills
demanded, pointing to significant gaps in both access to higher education and the quality of vocational
education and training.
Labor market information is not readily available to students and jobseekers to inform career choices
and to facilitate job match. Labor market information systems can help make labor markets more efficient
by improving the flow of information between job seekers and employers. When accurate information on
expected wages, occupations, and skills in demand, for example, is available, youth can compare
alternative career pathways and optimal educational investment. Both the qualitative and quantitative
evidence presented in the report points to difficulties in learning about basic labor market indicators and
in accessing job vacancies. Informal job search channels through friends and personal networks are the
rule, as reported by both employers and youth. The online public job portal ish.mehnat.uz. is mostly
unknown to youth. Those who have used it find it very difficult to register and not user‐friendly, as
employers cannot contact them. Youth use private online job portals more often to learn about job
postings.
In‐school career guidance is almost absent. Interviews with youth and representatives of schools indicate
that students are unprepared when they transition from school to work. Neither schools nor parents
provide them with the labor market information needed to inform their decisions. They do not have
access to updated information on the regional labor market, industry trends, or firms’ demands for
specific skills or specializations. Uzbek graduates make their educational and professional career choices
based on perceived interests, preferences, and ambition. Youth reported not knowing what occupations
are in demand, or pay better, and what educational paths are necessary to enter a particular occupation.
As a consequence, information gaps prevent optimal decisions and investments. Youth enter the job
market with very high expectations for wages and job aspirations that are often unmet. Aspirations
become less ambitious as youth try to transition from school to work – and may lead to discouragement.
Professional preferences play a much stronger role among graduates than among unemployed youth and
workers. Personal family networks play a major role in finding a job opportunity, thereby reinforcing
inequalities for those with poorer backgrounds.
Social stereotypes and cultural norms have a profound impact on young women’s participation in
economic activities, access to good employment opportunities, and the gender pay gap. Traditions that
foster early family formation and assign household duties largely to girls effectively remove girls from
accessing job opportunities. Women are also restricted in certain occupations (though the revised labor
code under review removes gender discrimination in all occupations, see Box 7). Almost all youth
participants of focus group discussions, both men and women, believe that the salary of a woman can be
8 The proportion of the total working‐age population 16 years old and older with tertiary education is estimated to be about 9.7%, based on HBS 2017.
xiii
significantly lower than that of a man for the same job/occupation. Respondents also indicated that
employers offer young women lower wages for the same job as young men because women generally
leave the workforce early and they cannot perform heavy physical work. While equally interested in
entrepreneurship, young women are less likely to pursue their entrepreneurial projects than young men.
Women make up only 40 percent of the workforce and an even lower percentage in higher‐skilled
occupations such as management positions.
Different types of interventions are already being implemented to facilitate youth employment, though
the coverage is small compared to the needs. Active labor market programs (ALMPs) are relatively new;
evidence on their effectiveness is scant; and they lack an integrated policy approach. Since 2018, the menu
of ALMPs expanded to include: hiring (wage) subsidies for socially vulnerable employees, training
subsidies for new hires though the Employment Support Centers, apprenticeships, new vocational training
and re‐training courses at newly established training centers, public works, job search assistance, start‐up
registration and insurance subsidies, the program “Youth is Our Future” to support youth
entrepreneurship through state bank loans at preferential rates (“soft loans”), and tax benefits for
enterprises employing youth. Nonetheless, the coverage is small: about 12 percent of the registered
jobseekers with the Employment Support Centers in 2020 benefited from employment support programs
from ESCs (employment subsidies, training, and apprenticeship excluding microloans, and Youth is Our
Future program) and about 521,000 public works were subsidized. Among the registered jobseekers, more
than a third (39 percent or about 321,000 youth) are youth who live largely in rural areas. The coverage
of employment programs provided by ESCs among youth is about 18 percent and 14 percent among
female registered jobseekers, while only a third of the public works programs were occupied by youth.
Most youth and employers interviewed were not aware of public employment services and programs.
Youth reported that jobs offered by the Employment Support Centers are not attractive, comprising
mostly low‐skilled and low‐paid job postings. A limited pool of vacancies requires specialized post‐
secondary education, and a scarcity of vacancies afflicts rural areas. Employers are mandated to register
with ish.mehnat.uz but do not rely on it as a recruitment channel. Despite the recent expansion of
government‐sponsored training and employment promotion programs for the unemployed, there is
limited awareness among youth and employers. Only 16 percent of firms report having interacted with
ESCs and among those, the request of wage subsidies (above quota) or training subsidies is a minor
fraction.
Labor mobility between businesses and sectors remains limited by complex occupational licensing and
credentials requirements. Uzbekistan’s labor market is still heavily regulated, requiring higher education
and other licensing for 70 percent of listed existing occupations. Some occupation licensing requirements
(such as, licenses to produce audiovisuals, realtor activities, electronic equipment rentals, etc.) have been
simplified in recent years, but others remain a constraint to greater labor market efficiency. In addition,
labor mobility has been constrained in the past by a rigid propiska system (residence registration). In the
past four years, the propiska system has been greatly simplified to allow people to work in a region other
than the region of residence. However, the right for Uzbeks to move internally is not fully granted as an
employee in the private sector must pay a “propiska tax” or state tax for temporary propiska once a year.
Information about the cost‐effectiveness of youth employment programs and services is fragmented,
dispersed, and incomplete. Access and availability of basic program monitoring data, such as number of
applications, reasons for acceptance of rejection of applications, actual spending, is not readily available
xiv
for most programs. To our knowledge, employment programs lack an evaluation of outcomes, such as
employment status (6, 12, 24 months) after program completion, quality and characteristics of work, and
salary level. Without clear and transparent information on key program information, it is difficult to assess
whether the programs are tailored adequately to the youth groups most in need and to know how to
strengthen successful programs and to discontinue ineffective programs.
While the report provides a holistic assessment of the constraints to youth employment, the
recommendations focus on strengthening the institutions, regulations, and supply side of the labor
market relevant for youth. The analysis of youth employment outcomes, youth‐specific constraints, and
existing labor market policies in Uzbekistan point to general and specific areas for policy actions to
improve labor market outcomes for youth. To address the existing challenges and weaknesses of the
existing policies and programs, a roadmap for the youth employment policy agenda in the short‐ and long‐
term is proposed. The purpose is not to elaborate on the broader multi‐sectoral jobs agenda but to focus
on specific aspects of policy that can assist youth in their transition from school to the labor market.
In the short and medium term, there is a need to (i) evaluate, reform, and expand existing ALMPs such
as wage subsidies and apprenticeships (on the basis of their cost‐efficiency); (ii) expand the provision of
skills and start‐up capital supporting youth entrepreneurship based on youth needs and international
good practice; (iii) support digital skills development by mainstreaming them in schools and VET centers;
(iv) provide better diagnostics of the skills and occupation in demand and make educational and labor
market information available for students and young job‐seekers; (v) institutionalize age‐appropriate
career guidance mechanisms; (vi) design sensitization campaigns and role models, enhance the provision
of childcare services, and enact more flexible labor regulation to encourage young women’s active
participation in employment and self‐employment; (vii) advance regulatory reforms to remove
occupational and labor mobility barriers across sectors and regions; (viii) facilitate organized (safe and
productive) labor migration; and (ix) raise awareness on public employment services and programs.
Over the long‐term, there are opportunities to improve youth employment policies to address some of
the more critical constraints, including the quality of the vocational education and training, access to
tertiary education, the large gender gaps, and implementation capacity constraints. A better
understanding of key constraints and international experience can help to: (i) establish stronger
partnerships with employers to improve the effectiveness of demand‐driven youth employment
programs, such as the internships, apprenticeships, and wage subsidies; (ii) strengthen the cooperation
between employers and education institutions to upgrade the curricula of vocational skill training and re‐
training in alignment with labor market needs and the revised national qualification framework and
learning assessment system; (iii) expand access to tertiary education; and (iv) strengthen the
implementation capacity of Employment Support Centers to provide individualized employment
assistance, including through digital technology to facilitate the transition to jobs.
1
1. Introduction
Many young people around the world face disappointing prospects when it comes to jobs.
Understanding youth aspiration is important as youth who do not find jobs matching their aspirations are
more likely to end up pooling out of the labor force and relying on household support. Jobs matter for
individual dignity and expectations, nor only productivity and living standards.9 When young people are
denied the future they have been promised, social stability is compromised and may become an issue.10
In addition, long spells of unemployment or underemployment undermine future job prospects for youth
and can lower future earnings.11
Youth generally face higher constraints to employment and were disproportionally hit by the global
pandemic. Youth have less experience working or searching for jobs, are less connected to jobs through
their social networks, and are more likely to be credit constrained. Uzbekistan is no exception:
unemployment rates are higher among youth and employment outcomes are worse in terms of job
security, social insurance and protection, and pay. Unemployment and inactivity are only part of the
problem as another main constraint facing young people is that they are either underemployed or
employed in low‐productivity work. Young people are compelled to take low‐productivity and low‐paid
jobs to make a living because of scarcity of formal job opportunities. Young women face even greater
challenges to access the labor market and find work.12 In addition, the share of youth withdrawing from
the labor force has been increasing during the pandemic, especially among the self‐employed.13
Uzbekistan is one of the youngest countries in the ECA Region. While populations in most other ECA
countries are aging, young people are the majority in Uzbekistan, similar to other Central Asian countries
with high youth‐to‐population ratios.14 In addition, Uzbekistan has the largest regional pool of youth in
absolute numbers, with 15 million youth up to 24 years old (18 million up to 29 years old).15
The country’s demographic dividend, if realized, could boost economic growth through productive and
inclusive employment growth. The working‐age population is expected to increase by 12 percent in the
9 World Bank (2013). 10 Datta et al. (2018). 11 Kahn (2010). 12 The labor participation gap between men and women is 26 percentage points for age 20‐24 and increases to 36 percentage points for age 25‐29 (L2CU 2018). The employment gap is smaller (16 percentage points) for age 20‐24 but again as high as 36 percentage points for age 25‐29 (L2CU 2018, employment‐to‐population ratios). 13 State Statistical Committee (2017) HBS for inactivity rates and World Bank (2018) L2CU high‐frequency data. 14 The share of the population below the age of 25 is 45% in Uzbekistan and for youth below the age of 29, it is 58% (UN population data, 2019, reporting the 2020 estimates). The highest (0‐25) youth‐to‐population ratio of the ECA Region is found in Central Asia, with Tajikistan (55%), Kyrgyzstan (48%), Turkmenistan (46%), Uzbekistan (45%), and Kosovo (43%) (UN 2019 and Kosovo statistical data 2017). Similar ranking follows when considering (0‐29) youth‐to‐population ratios, Uzbekistan having the fourth‐highest ratio of the region. 15 The data reported is the 2020 estimates (UN 2019).
2
next ten years, the third highest population growth in ECA after Tajikistan and Kyrgyzstan.16 About 535,000
youth graduated from vocational colleges and higher education institutions in 202017 and looked for first‐
time job opportunities. Uzbekistan’s demographic dividend is expected to peak in 2045,18 when the
country’s labor force will be at historically high levels compared to its population.
Until a shift from state‐driven to private sector‐led economic growth is advanced, job creation will
continue to stagnate and is not expected to pick up shortly to absorb the increasing new labor market
entrants. The country’s real gross domestic product (GDP) per capita growth averaged 5 percent over the
last two decades, without generating a sufficient number of jobs for its labor force. The pace of new job
creation in the economy averaged about 280,000 per year between 2004 and 2016 and fell to about
243,000 between 2017 and 2019, well below the half‐million new labor market entrants every year. Most
of these jobs are informal19 in lower‐productivity sectors such as agriculture, construction, and
manufacturing.20 The concentration of market power in a few large state‐owned enterprises (SOEs) may
have limited job creation. Prospects for future high‐quality job opportunities are linked with the
development of private small and medium enterprises, increased market competition, further
development and expansion of the professional service sector and high‐tech manufacturing, and foreign
direct investments .21
Notwithstanding existing labor demand, there is evidence of large skills gaps and mismatches. Private
sector employers highlight the lack of a skilled workforce as one of the main impediments for both
employment and labor‐productivity growth. The lack of a skilled workforce is ranked as the biggest
obstacle by 8.5 percent of firms and by 16 percent of large firms (with more than 100 employees).22
Employers recognize large skills gap, in technical and socioemotional skills among youth, and attribute it
to an outdated education system and limited partnership between employers’ associations and the
education system.
Underutilization of human capital among youth may hamper Uzbekistan’s economic transformation.23
A disconnect between the professional skills development of youth and the private sector demand has
resulted in the underdeveloped potential and discouragement of youth. Migration in search of better job
opportunities is becoming a natural coping strategy. This underutilization of human capital among youth
represents a loss from the perspective of individuals and the society as a whole. Especially in the context
of the Uzbekistan economic transformation and its transition to a full market economy.
16 Between 2020 and 2013, the working‐age population is expected to grow 22 and 14%, respectively, in Tajikistan and Kyrgyzstan. 17 If we add graduates from lyceums, there were 582,000 graduates in 2020. 18 Uzbekistan’s working‐age population increased from 11 million in 1990 to almost 19 million in 2017, and an additional 4.3 million are expected to enter the labor force by 2030 (UN 2019). 19 The Ministry of Employment and Labor Relations estimates that about 59% of total employment was informal in 2019. 20 World Bank (2019). 21 ADB (2020); Campbell and Ronnås (2020). 22 World Bank Enterprise Surveys 2019. 23 Uzbekistan was one of the first countries to join the World Bank Human Capital Project; however, the Human Capital Index (HCI) could not be generated, as the needed assessments and data were not available. The HCI motivated the country to start collecting the data. Now we have a Human Capital Index (HCI) of 0.62 calculated in 2020 (World Bank 2020e) based on the data from the national assessment of learning outcomes.
3
Youth employment policies, and active labor market policies (ALMPs)24 in general, are necessary to
accompany the transition to a vibrant and inclusive private sector‐led growth model. Until 2017,
Uzbekistan was a closed economy where the private sector played a limited role. In the state‐driven
economic growth model, SOEs provided protected jobs and acted de facto as public sector employment
schemes. The education system had little incentive to produce the skills to satisfy labor market needs, as
there was limited demand for productivity enhancements among workers. In such context, there was less
need for incentives and active measures to facilitate the transitions to and across jobs. As the country
develops, the private sector needs high‐quality skilled workers to boost productivity. Youth employment
programs and the upgrade of technical and vocational skills to best respond to employers’ demand are
priority investments to accompany and sustain the recent reforms to privatize SOEs,25 increase market
competition and job creation, and facilitate firms’ adoption of new technology and innovation.
Uzbekistan’s general education system needs also to align with the growing private sector and to catch
up with the rapidly changing structure and labor market demands.
The youth bulge and the human capital losses caused by the pandemic compound the pressure to tailor
effective youth employment policies. The COVID‐19 pandemic caused learning gaps, rising
unemployment rates, enterprise closures, and shrinking of some sectors, which may have long‐term
impacts on the labor market and human capital.26 The demographic pressures, high unemployment rates
among youth, worker displacements expected from the privatization process of SOEs, and the global
concerns over automation all make it imperative that policymakers consider expanding ALMPs. While
evidence on the effectiveness of training and active labor market programs for youth is mixed,27 the
Uzbekistan context calls for increased investment for building the right skills of the next generation,
upskilling of the current workforce to respond to private employers’ needs, and enhancing ALMPs to
improve the match between labor supply and demand.
To address the youth employment challenge, the government of Uzbekistan has allocated over UZS 300
billion (almost $30 million) to support youth entrepreneurship and employment for 2021. During his
speech at the end of 2020, President Mirziyoyev announced 2021 as the Year of Supporting Youth and
Strengthening Public Health. To this end, efforts are ongoing to reform the vocational education system
to best respond to the labor market needs in accordance with international standards, introduce a system
to assess professional qualifications, expand the provision of vocational training by launching new training
centers around the country, invest more on promoting youth in agriculture by allocating free land to youth
and by cultivating youth entrepreneurship through soft loans. Presidential resolutions have been
approved to create youth industrial and entrepreneurial zones (techno‐parks) in all regions in 2021 and
24 ALMPs offer a series of services to students, job seekers, existing workers, and firms to facilitate their transition from school or unemployment to stable quality jobs, facilitate first‐time entry to labor markets, and their adjustment to changing labor market conditions. ALMPs include a wide range of interventions, intended to foster the quality of labor supply (e.g., skills training programs), an increase in labor demand (e.g., wage subsidies and job vouchers, public works and programs supporting entrepreneurship and microenterprise development), or an improvement in matching individuals and jobs (e.g., job search assistance, employment services). 25 Today SOEs run about 55% of Uzbekistan’s economy. As per Presidential Decree No. 6096 (2020), Uzbekistan is slated to sell fully or in part some 620 of the country’s 2,500 state‐owned companies. 26 Azevedo (2020). 27 McKenzie (2017), Fox and Kaul (2017), Card et al. (2017), Crépon and Van den Berg (2016), Kluve et al. (2016), and Kluve (2010).
4
to incentivize entrepreneurs to hire young specialists.28 A new government agency – the Agency for Youth
Affairs – has been established. The Youth Union has more than 30 non‐governmental organizations.
Different types of interventions are already being implemented to facilitate the school‐to‐work
transition. Existing employment promotion programs range from vocational training and employment
services to wage subsidies to incentivize employers to hire socially vulnerable unemployed29 and to
provide training to new hires, including youth, public works, and programs that support entrepreneurship
in rural areas. However, the scale of active labor market programs is limited compared to the needs and
the effectiveness of these programs has not been rigorously evaluated.30 Moreover, only a couple of
programs targeted to youth and designed to specifically address youth barriers and needs. Importantly,
there is limited awareness among youth as evidenced by our study.
A new National Employment Strategy is being developed to lay out the policy goals and targets for 2021‐
203031. The Ministry of Employment Relations and Labor (MELR) has identified the following labor market
challenges: (i) job creation rate that is not at pace with working‐age‐population growth; (ii) high rate of
potential unemployment (over two times higher than the official unemployment rate) and
underemployment due to high share of unpaid family workers and seasonal workers; (iii) high share of
informal employment (almost 60 percent of total employment according to MELR) and resulting low base
for social insurance contributions, low pensions; (iv) absence of a professional qualification framework
and a system to assess professional skills; (v) limited entrepreneurial skills among the general population;
(vi) high percentage of unregulated migrants; (vii) absence of reliable and available information on skills
and occupations in demand, employment outcome indicators by geographical areas; and (viii) low human
and physical capacity of labor market institutions.
Promoting safe, less costly, and more productive labor migration is a recent policy objective.32
Historically, Uzbekistan has almost ignored the problem of labor migration. Only over the past couple of
years has the government focused on and approved reforms to protect international and internal labor
migration and migrants. It has done so by increasing the share of organized labor migration through the
28 UZS 300 billion (almost $30 million) has been allocated in 2021 to solve the problems of 430,000 youth included in the “Youth Notebook.”28 Starting 2021, wage subsidies were introduced to reimburse employers for the amount of social tax charged for their employees under the age of 25. The introduction of a subsidy to students of vocational and technical schools for UZS 500,000 per month for six months for internships at enterprises has become a highly prized incentive for youth and their parents. 29 The socially vulnerable unemployed are, by law, recent college graduates, people with disabilities, former military service personnel, former prisoners, victims of human trafficking, long‐term unemployed, and unemployed close to retirement age. 30 Papa et al. (2020). 31 The Strategy for Promotion of Employment for the Population of the Republic of Uzbekistan for 2021 – 2030. 32 Since 2017, within the wider liberalization reform agenda, major reforms to promote international mobility were adopted: the required government permission to travel abroad was abolished (starting on January 1, 2019) and negotiations with the Russian Federation were initiated on establishing a joint migration processing center in Uzbekistan. Before 2017, official policies and administrative practices discouraged organized external labor migration by mandating and creating a highly bureaucratic process for exit visas (such as, time‐consuming and expensive registration procedures).
5
Agency for External Labor Migration,33 allowing private employment agencies to carry out activities to
employ citizens of Uzbekistan abroad, introducing preferential fees and subsidized loans to purchase
travel tickets for temporary labor migrants, creating a Fund to support and protect the rights and interests
of migrants working abroad, canceled the required permits to work abroad, and lifting employment bans
for internal migrants. In the wake of the pandemic, feedback mechanisms34 have been established to
address the immediate needs of temporary migrants; active labor market policies have been expanded
for temporary migrants restrained by travel restrictions; and social protection and reintegration programs
have been implemented for former migrants and their families. Since 2020, special training courses
tailored to labor migrants have been established for the development of their professional skills and
foreign language skills.
Constraints to youth employment in Uzbekistan are assessed in this report via a mixed‐method
approach by interviewing working and non‐working youth as well as employers. The analysis draws on
newly collected microdata to deepen the understanding of youth employment challenges from the point
of view of both youth and employers. Qualitative data were collected in early 2020 through focus group
discussions among inactive and unemployed youth, young workers, and recent graduates to better
understand what drives their job aspirations, the reality of their aspirations, and their key constraints to
access wage employment and self‐employment (see Box 1 and annex 1 for details on the youth qualitative
survey). A firm survey was carried out in 2020‐2021 to generate new evidence on employer constraints to
hire youth and their feedback on the skills set (see Box 1 and annex 2 for details on the firm quantitative
survey).
This report reviews the main challenges to youth employment in Uzbekistan and identifies
opportunities to boost youth labor market inclusion to sustain economic growth and the ongoing
economic transformation. The structure of the paper is as follows: section 2 provides a snapshot of the
labor market based on HBS and L2CU survey data; section 3 describes youth aspirations as they enter the
labor market and the reasons for discouragement for those who exit (based on focus groups with over
267 youth and 22 key informant interviews); section 4 presents the job search channels used by youth
and firms and the main hiring constraints firms face when trying to recruit with a focus on youth and
young women (based on a firm survey covering 560 firms); section 5 discusses employers’ skills needs and
their views on skills mismatches in their young workforce (based on the same firm survey); section 6
discusses the regulatory barriers and youth access to programs promoting youth employment and public
employment services; and section 7 concludes and discusses policy recommendations.
33 The Agency for External Labor Migration was established under the Ministry of Employment and Labor Relations in 2019 to facilitate, reduce the cost of, and promote organized migration. It has the authority to contract with foreign enterprises and signed cooperation agreements with 42 employers and private recruitment agencies It opened branches in each region and has offices in major cities often within the Employment Support Centers and Multifunctional Job Centers. The Agency’s foreign branches are being established in Russia, and partnerships with major foreign employers are expanding. 34 birgamiz.com and anketa.migration.uz are a call‐center and a dedicated telegram channel, respectively.
6
Box 1 : Main data sources used in the report
Household Budget Survey (HBS) 2017 is used to report main labor market indicators. The survey is
conducted on a regular basis and relies on a large sample (over 10,000 households per year). HBS is
representative at the national and regional level, covering the Republic of Karakalpakstan, 12 regions,
and the city of Tashkent (section 2).
Listening to Citizens of Uzbekistan (L2CU) 2018 baseline household survey comprises 4,000 households
and is representative at the regional level; since 2019, monthly follow‐up survey data have been run by
the World Bank, the Development Strategy Center of Uzbekistan, and other partners (section 2).
Youth qualitative data from focus groups with 267 youth (of different employment status and gender)
and 22 key informants from youth or labor‐related organizations (Employment Support Centers,
Chambers of Commerce and Industry, Centers for training and retraining the unemployed, Uzbekistan
Youth Union, and Women’s Committee), across four regions (Samarkand, Khorezm, Ferghana, and
Tashkent City). The data was collected between January and March 2020 (pre‐pandemic) (section 3). See
annex 1 for the detailed methodology.
Firm survey: quantitative data 2020‐2021 from 560 employers of small, medium, and large firms, across
six regions (Bukhara, Kashkadarya, Khorezm, Samarkand, Tashkent, and Ferghana). The survey is
representative for registered firms by firm size and sectors (manufacturing and construction, wholesale
and retail, and other services). The data was collected by phone interviews between December 2020 and
March 2021 (sections 4 and 5). See annex 2 for the detailed methodology.
7
2. A snapshot of the labor market
The Uzbekistan youth bulge offers opportunities. The total and working‐age population in Uzbekistan is
growing and is expected to grow until 204535 (Figure 1). The share of the population younger than 25 years
old is 45 percent, and the total fertility rate is 2.4 (one of the highest in ECA, where the average fertility
rate is slightly less than two children per woman), with projections around 2.2 in 2040. These demographic
trends offer the potential to increase domestic production and growth but also increase the pressure on
the domestic labor market and push some Uzbeks to migrate to other countries in search of (better)
employment and income opportunities. Given the youth bulge in Uzbekistan, youth unemployment is a
serious concern for policymakers, as it limits the country’s potential to reap the economic benefits of the
demographic dividend.
Figure 1: Uzbekistan population is young and will remain so in the next 30 years
A. Population in 2020, millions B. Population in 2050, millions
35 UN (2019 revision).
8
C. Working‐age population 2000‐2100 (Thousands)
Source: UN (2019 revision).
Note: On A and B, medium‐variant projections for 2020‐2100 are shown as thin colored lines, and uncertainty is
shown in lighter shades for 95 percent prediction intervals.
Uzbekistan compares favorably with other Central Asian countries and lower‐middle‐income countries
in the ECA Region for the labor force participation rate36 (Figure 2). According to HBS 2017, 61.2 percent
of individuals age 16 and older participate in the labor force, of whom over 56 percent are employed. The
labor force participation rate in Uzbekistan is also higher than the average rates (excluding high‐income
countries) of lower‐middle‐income countries in the ECA Region. The HBS‐based estimate of labor force
participation is somewhat smaller than the International Labor Organization (ILO) modeled estimate used
in the Word Development Indicators database: 61.2 versus 65.4 percent.
36 Labor force participation (LFP) for the working‐age population 16 years old and older based on HBS 2017 data is
close to, but still somewhat smaller than, to that reported by the State Statistics Committee (SSSU). The gap probably
arises from different approaches for defining employed and population coverage. If an upper age limit that
corresponds to the retirement age (55 for women and 60 for men) is set, labor force participation and employment
rates increase to 71% and 65.3%, respectively. ILO reports the same numbers for labor force participation,
employment, and unemployment rates in Uzbekistan as SSSU (ILOSTAT 2017). Labor force participation estimated
based on the L2CU 2018 survey is much lower: 42.5% for age 15‐65 and 45.5% for age 15 and older. The level of
economic activity is difficult to estimate, especially in rural areas, because many work in their tomorka and receive
in‐kind income or participate in temporary, seasonal jobs (most often in agriculture, for example, harvesting crops).
SSSU reports that in 2020, labor force participation was 74%, the employment rate was 66%, and the unemployment
rate was 10.5%.
52
54
56
58
60
62
64
66
68
70
2000 2020 2040 2060 2080 2100
% Share Working Age Populaiton
Working Age Population ‐thousands
Working Age Population ‐ thousands (left)
% Share Working Age Population on Total Population (right)
9
Figure 2 : Labor force participation rate in Uzbekistan and selected countries (15+ years)
Source(s): For countries and country groups, World Development Indicators 2017 (World Bank 2021a); for Uzbekistan,
based on Household Budget Survey (HBS) 2017 (SSSU 2017).
The gender gap in labor force participation is among the highest among comparator upper‐middle‐
income countries, especially among youth. Less than half of all Uzbek women age 16 and older are active
in the labor market, compared to three‐quarters of all men age 16 and older (Figure 3, Panel A). Thus, the
gender gap in labor force participation in Uzbekistan is 28 percentage points,37 which is almost double the
average gender gap in high‐income countries (15 percentage points) and substantially higher than the
average gender gap in upper‐middle‐income countries (20.5 percentage points). Yet, Uzbekistan’s average
gender gap is lower than the average of its comparator lower‐middle‐income countries (41.5 percentage
points).38
The low labor force participation of women in Uzbekistan partly explains the relatively low employment
rates in Uzbekistan as a whole. Women comprise 50.3 percent of total population age 16 and older but
38.8 percent of the labor force and 35.7 percent of employment. The disparity in labor force participation
rates between women and men is large for age 25‐34 (43 percentage points) and even larger for age 55‐
59 (47 percentage points) because women retire earlier than men (Figure 4). Low participation of women
in the labor force is most likely due to gender‐related stereotypes and social norms, as childcare and
household chores follow a model where they are performed by women.39
37 According to the L2CU 2018, the gender gap in labor force participation rate is about 27 percentage points, with the labor force participation rate of 56.3% for men and 29.4% for women (for 15+ years). 38 Gender gaps in other countries are calculated using 2017 World Development Indicators data (World Bank 2021a), series “Labor force participation rate, female (% of female population ages 15+) (modeled ILO estimate)” and “Labor force participation rate, male (% of male population ages 15+) (modeled ILO estimate)”. 39 EBRD (2016).
70.965.2 65.4 62.4 61.7 61.2
54.2 52.643.6 42.3
59.0 56.7Kazakhstan
Turkmen
istan
Uzbekistan (WDI)
Russia
Kyrgyz Rep
ublic
Uzbekistan (HBS, 16+)
Ukraine
Turkey
Tajikistan
Moldova
Europe & Cen
tral Asia
(excluding high
income)
Lower m
iddle income
countries
10
Figure 3 : Labor force participation and unemployment rates by gender and age (%)
A. Labor force participation rate B. Unemployment rate
Source(s): Based on HBS 2017 (SSSU 2017).
Note: The underlying population group is age 16 and older.
Figure 4 : Reasons for inactivity by gender and age (%)
A. Men B. Women
Source(s): Based on HBS 2017 (SSSU 2017).
Note: The underlying population group is age 16 and older. Institutionalized population includes household members
who were absent because of military service (conscripts), imprisonment or treatment in hospitals. Note that
temporary economic migrants are classified as “employed” not inactive. Absent members for education are included
in “students” group.
56
95 95 91
56
4
75
38
60
7464
71
47
16‐24 25‐34 35‐44 45‐54 55‐64 65+ Total
Men Women
9
2 13 3
03
28
16
10 10
4
0
15
16‐24 25‐34 35‐44 45‐54 55‐64 65+ Total
Men Women
0 20 40 60 80 100
16‐24
25‐34
35‐44
45‐54
55‐64
65+
Total
Pensioner, social assistance beneficiaryStudentVoluntarily non‐employedInstitutionalizedOther
0 20 40 60 80 100
16‐24
25‐34
35‐44
45‐54
55‐64
65+
Total
Pensioner, social assistance beneficiaryStudentVoluntarily non‐employedInstitutionalizedOther
11
Youth risk becoming discouraged and dropping out of the labor force when job search becomes
protracted and unproductive. The “discouragement rate”40 as a share of the respective age population is
high in Uzbekistan compared to the regional context, reaching 5 percent among age 15‐24 compared to
less than 2.5 percent in most neighboring ECA countries (Figure 5), declining to 4.1 percent among age
25‐29. Labor discouragement is higher among young women and in rural areas: for age 25‐29, the
discouragement rate among women is 40 percent higher than among men (4.8 percent and 3.4 percent,
respectively); for rural areas, the discouragement rate is almost 50 percent higher than urban areas (4.6
and 2.4 percent, respectively). Among the inactive, the share of discouraged is 7.5 percent for age 15‐24,
10.3 percent for age 25‐29, and as high as 26 percent for men age 25‐29.41
Figure 5 : Labor discouragement rate among 15‐24 years old
Source(s): For Uzbekistan, based on L2CU 2018 (World Bank 2018): for other countries (except Georgia and
Kazakhstan for which 2017 data is used) based on Labor Force Survey (LFS) 2018 (ILOSTAT 2018). For Kazakhstan,
total population is taken from ILO‐modeled estimates (2017), as these data are not available in LFS 2018.
Note: Discouraged people are defined by ILO as persons of working age who during a specified reference period were
without work and available for work but did not look for work in the recent past for specific reasons (for example,
believing jobs were not available, they were unqualified for available jobs, or having given up hope of finding
employment). A similar definition is used to compute the indicator for Uzbekistan (see footnote 40). The rate is
computed for the age 15‐24 population and expressed as a percentage of the age‐group population.
Youth are particularly vulnerable to unemployment and young women face higher constraints in finding
employment than young men. Youth unemployment rates are, as a rule, considerably higher than those
of older workers. Youth unemployment and discouragement are attributed to a lack of experience and
skills mismatch. But in Uzbekistan, the unemployment rate is considerably higher among women
compared to men at all ages before the retirement age, and especially among youth (Figure 4, Panel B).
40 ILOSTAT defines “discouragement“ as the phenomenon whereby people who are willing to work are out of the
labor force because they believe that jobs are not available for them. With available data, we measure
discouragement as the share of working‐age individuals who are not employed and not looking for a job (inactive)
for either lack of employment, not knowing how to look for a job, too young, or too old to work and who would be
willing to work if a job or business opportunity became available (World Bank 2018). 41 Based on L2CU (2018) and LFS 2018 (ILOSTAT 2021a). As a comparison, the share of total 20‐24 Uzbek youth who are discouraged was 10% based on 2013 CALISS data (Ajwad et al. 2014).
0%
1%
2%
3%
4%
5%
6%
Share of 15‐24 population
12
After reaching the retirement age, men and women do not self‐report as unemployed (i.e., looking for a
job and being available to take it).
Too many youths fail to transition into work after finishing school. The share of youth who are not in
employment, education, or training (NEET) is high in Uzbekistan; almost one in four (24 percent) of youth
ages 16‐24 were NEETs in 2017. In comparison, NEETs represent only one‐sixth of the youth population
in the ECA Region as a whole and even less in the European Union (EU) member countries in the region,
including Bulgaria, Poland, and Romania.42 In Uzbekistan, the NEET rate is highest (over 30 percent) in
three regions – Namangan, Fergana, and Kashkadarya – largely due to very high (45 percent)
unemployment and inactivity among young women.
The NEET gender gap in Uzbekistan is the highest in the region. The NEET rate for young women is four
times higher than the NEET rate for young men. About 38.2 percent of women age 16‐24 were NEET in
2017, compared to 9.4 percent of men in the same age group—a gap of 29 percentage points. For age 16‐
29, the gap narrows to 18 percentage points, with 44 percent of women jobless, not in education, or not
looking for work, compared to 8.5 percent of males. Uzbekistan has the highest NEET gender gap in the
region (Figure 4).
Figure 6 : NEET rates, selected comparator countries
Sources: For comparators, NEET rates in age 15‐24 (2017 or earlier years as indicated above, age 15‐24) World Development
Indicators 2017 (World Bank 2021a); for Uzbekistan, NEET rates in age 16‐24 based on HBS 2017 (SSSU 2017).
42 The 15‐24 age group is used here to refer to NEET youth because of greater comparability with data available for other countries. The figure for Armenia is based on LFS 2017; males who are serving in the military are not considered part of the working‐age population for the purpose of this calculation. The source for ECA NEET percentages is World Development Indicators and includes only International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) countries for which 2016 data are available.
13
Higher educated youth are more likely to participate in the labor force and be employed, though higher
levels of educational attainment from professional colleges does not secure a smooth transition to
employment. Individuals with specialized post‐secondary education are the largest group within
educated youth (66 percent) but have higher unemployment than youth with upper secondary and
tertiary education. This is especially the case for women with post‐secondary education (secondary
specialized education according to the national classification) who have a much higher unemployment
rate (17.2 percent) compared to women with either a lower or higher level of education and compared to
men in any education group. This may be due to the strict licensing and minimum education certification
requirements for certain occupations (Box 2). Lower educated individuals are less likely to participate in
the labor force and more likely to be unemployed, but this group is very small and is predominantly
comprised of youth who have not yet completed education. Hence, a higher level of education decreases
the risk of youth unemployment, but it does not fully protect youth against unemployment. The
unemployment rate among individuals with post‐secondary professional diplomas is 9 percent, compared
to almost 7 percent for upper secondary education and 4 percent for tertiary education.
Table 1 : Labor market outcomes by level of education and gender
Level of education Unemployment rate Labor force participation rate Employment rate
Total Men Women Total Men Women Total Men Women
Primary and below 13.7 16.8 12.6 3.5 2.0 4.8 3.0 1.6 4.2
Lower Secondary 10.5 7.4 15.1 11.0 14.0 8.3 9.9 12.9 7.1
Upper Secondary 6.9 1.6 14.9 59.1 77.1 43.7 55.0 75.8 37.2
Post‐Secondary 9.0 3.7 17.2 70.1 85.0 55.1 63.8 81.9 45.6
Tertiary 3.8 2.7 6.1 71.0 77.7 60.9 68.3 75.6 57.2
Total 7.9 3.1 15.4 61.2 75.3 47.3 56.4 73.0 40.0
Source: HBS 2017 (SSSU 2017).
Note: For working‐age population age 16 and older.
Box 2 : Occupational and mobility barriers to labor market entry
Uzbekistan’s labor market is still heavily regulated, requiring higher education and other licensing for
70 percent of listed existing occupations. Minimum education requirements, licensing, and certification
procedures are often necessary to protect workers’ safety; however, they may be distortive and
generate inequalities as the supply of higher education is limited in Uzbekistan and not affordable to
everyone. In addition, such heavy occupational licensing requirements limits labor mobility across
sectors and job reallocations.
14
The government recently ordered the reduction of higher education requirements, with the goal to
promote employment among women and youth.43 In addition, a Presidential Decree of January 2021
simplified or removed 70 out of 266 types of occupational licenses, as well as 35 out of 140 permits.
Some occupational licensing requirements (such as, licenses to produce audiovisual works, realtor
activities, electronic equipment rentals, etc.) have been simplified in recent years, but others remain a
constraint to greater labor market efficiency.44
Among the most important reforms since 2018 are the flexibilities introduced in the regulation of the
propiska system (residence registration). Beyond the simplification introduced, which allows requesting
temporary residence registration, the restriction on applying for jobs in places other than a person’s
region of permanent residence has been removed. Currently, people can apply to formal work in a
region other than where they are registered. However, the right for Uzbeks to move internally is not
fully granted, as an employee in the private sector must pay a “propiska tax” or state tax for temporary
propiska once per year. Similarly, the right to education should be granted as opposed to the quota
system for temporary residents that is currently implemented. Despite the important simplifications
introduced, the propiska system still creates key inefficiencies in several dimensions not just in human
development (e.g., access to education, health, and social protection benefits/services) but also in
other dimensions, existing restrictions to labor mobility, restrictions to economic inclusion and
empowerment, and distortions in the housing market (Muradov and Seitz 2020).
The unemployed are slightly less educated than the employed, though the oversupply of unemployed
with post‐secondary technical education points to limited job creation requiring technical and
occupational skills. Overall, 12 percent of workers have tertiary education, 61 percent have post‐
secondary education, and 26 percent have general secondary education. Among the unemployed, there
is a marked oversupply of workers with post‐secondary education (70 percent among all unemployed and
67 percent among youth aged 25‐34) who do not find jobs while 6 percent of the total unemployed (and
similarly 7 percent of youth unemployed) have tertiary education (pointing to friction and skills
mismatched). This means that the creation of jobs requiring specific professional and higher skills would,
in part, solve youth unemployment. The share of unemployed with secondary general education, who
have no occupational skills, is 22 percent lower than the share among the employed, meaning that they
are more easily absorbed in low‐ to middle‐skilled, mostly white‐collar jobs. In contrast, only if economic
growth will result mostly in the creation of high‐productivity, high‐skilled jobs, then the large share of
unemployed with technical skills may benefit from it.
43 https://president.uz/ru/lists/view/3883 44 World Bank. Uzbekistan Country Economic Memorandum and Systematic Country Diagnostic, forthcoming.
15
Figure 7 : Educational structure of employment and unemployment
Source: Based on HBS 2017 (SSSU 2017).
Note: For working‐age population age 16 and older.
The demand for tertiary graduates is high as shown by the best employment outcomes, though serious
access constraints still exist. The employment rate is the highest and the unemployment rate is the lowest
among tertiary educated youth compared to youth with lower education attainment (Table 1). Workers
with a bachelor’s degree are less likely to be unemployed and more likely to have a job than their
counterparts with technical diplomas. However, there are few tertiary graduates. Youth who participated
in our focus group discussions reported serious barriers to access universities; some said they had tried
to enroll for four consecutive years without success. A lower proportion of higher education is especially
characteristic among rural areas, because there are no universities and families cannot always send their
children to cities. Cultural norms further constrain girls’ and women’s higher education. Overall, the
number of universities in Uzbekistan is extremely low compared to the demand for workers with higher
education,45 and the distribution of graduates’ specializations has been primarily driven by government
priorities and state quotas rather than by the needs of a changing economy.46
The proportion of youth with higher education in the country is the lowest in the region. Uzbekistan has
the lowest tertiary attainment rate of the ECA Region (Figure 8), and the quality of learning in universities
is low as measured by quality‐adjusted years of tertiary education (Uzbekistan having the lowest of the
region).47 Only 6.6 percent of youth aged 16‐34 have a university diploma, while two in three youth have
45 The vast majority of universities are concentrated in the capital; a small number of universities (2‐3) are found in
the regions, mainly for liberal arts (e.g., medicine, pedagogy, philosophy, and social work). 46 World Bank (2018a). 47 World Bank (2020c). The low quality‐adjusted years of tertiary education is intrinsically related to the absence Uzbek universities in the six international standard rankings: Times Higher Education; Quacquarelly Symondsranking; Academic Ranking of World Universities (also known as Shanghai ranking); Center for World University Rankings; U.S. News Global Universities Ranking; and U‐Multirank. Within the ECA Region, Uzbekistan, Kosovo, Kyrgyz Republic, and Tajikistan do not have a university in the six rankings.
26% 22% 22% 25%
61% 70% 64% 67%
12% 6% 13% 7%
Total Employed Total Unemployed Young (25‐34) Employed Young (25‐34)Unemployed
Lower secondary and below Upper secondary Post‐secondary Tertiary
16
a post‐secondary specialized technical diploma, 14 percent have a lower secondary education (grade 9),
and 12 percent have an upper secondary diploma (grade 11) based on the HBS 2017.48
Figure 8 : Tertiary education attainment in the ECA Region
Source: World Bank (2020c).
Note: EU average is population weighted. Data from 2019. Educational attainment measured as the percentage of
individuals with a higher education degree at age 30‐34.
The government has made significant efforts to increase public access to higher education over the past
five years. A particularly important part of this policy has been the increased investment in new
universities and the creation of national university branches in the regions. This is expected to significantly
increase the access to higher education for residents of the regions, including poor families and girls. Girls
have lower opportunities to higher education not only due to the limited supply of tertiary education but
also social and cultural norms and mobility constraints. The number of universities has reached 127 in
2021 and branches of 26 foreign universities have been opened. Over the past five years, the quota for
admission to higher education has more than doubled, reaching 157,000 in 2021 and bringing the
enrollment rate in tertiary education to 22 percent in 2021, compared to 9 percent in 2017.49
Youth are disproportionately affected by unemployment, especially in Fergana and Jizzakh regions. The
unemployment rates vary substantially across all 12 regions and age groups (Figure 9)50. Youth aged 16‐
24 have consistently higher unemployment rates and so do youth aged 25‐34 with the exception of
Tashkent City. In addition, while the gender gap in unemployment is relatively small in Andijan, Bukhara,
and Syrdarya regions (1‐5 percentage points), it is exceptionally high in Jizzakh region (31 percentage
48 The proportion of the total working‐age population 16 years old and older with tertiary education is estimated to be about 9.7% based on HBS 2017. 49 Based on data from MELR and Ministry of Higher Education which are consistent with estimates of the gross enrollment rate (GER) for the age group (18‐23) reported by UNESCO: the GRE is 9.2 in 2017 and 12.6 in 2019 (the latest year available). 50 The ranking of regions in terms of the unemployment rate differs between HBS and what is reported by the State Statistics Committee. For example, Jizzakh– the region with the highest unemployment rate according to the HBS – performs relatively well according to Statistical Committee data, with the unemployment rate being lower than the national unemployment rate in Uzbekistan. These discrepancies are most likely due to the differences in the definition of the unemployed and unemployment rate.
10%15%20%25%30%35%40%45%50%55%60%65%
UZB BIH TJK
ALB
AZE
TUR
HRV
KGZ
HUN
ROU
MKD
ARM
BGR
SRB
MNE
MLT
KAZ
MDA
CZE
SVK
SVN
GEO BLR
LVA
EST
POL
CYP
UKR
LTU
RUSSh
are of population ages 30‐34
EU Average
17
points). In Jizzakh region, which has the highest unemployment rate, more than one in three women in
the labor force is classified as unemployed, compared to one in 25 men. Similarly, Namangan and
Kashkadarya regions have the highest gender gaps in labor force participation (29.1 and 32.7 percentage
points respectively), making these regions outliers.
Figure 9 : Unemployment rate by region and age group (%)
Source(s): Based on HBS 2017 (SSU 2017).
Youth who find jobs are often in precarious activities that provide little in terms of income and security.
Overall, wage employment is almost as common as self‐employment in Uzbekistan,51 and half of the
young workers are self‐employed, most likely as contributing family members. Roughly one in five workers
is engaged in agriculture. The majority of young workers aged 25‐34 are working in low‐productivity
sectors such as agriculture (20 percent), subsistence agriculture producing goods and services for their
own family consumption (9 percent), construction (16 percent), trade (10 percent), and other less
knowledge‐intensive service activities such as transportation and accommodation (15 percent). Only 3
percent of young workers are engaged in professional services requiring higher skills, 12 percent in the
industry sector, and 16 percent in the public sector. More productive agriculture would help create more
jobs in food and light manufacturing and better paid job opportunities for youth.52
Labor migration plays a role in shaping the labor market outcomes of youth. International labor
migration is a fundamental coping mechanism, more common among poorer households and in areas
with low labor force participation and low confidence in local economic prospects. International labor
migration is driven in large part by weak local labor markets.53 On average 5.5 percent of individuals aged
16 and above are international labor migrants, while less than one percent (0.6 percent) are domestic
51 About 51% of the employed are wage employed and 49% are self‐employed, including contributing family members and employers, based on HBS 2017. The HBS‐based incidence of self‐employment. (42%) is the same as in World Development Indicators 2017 (42%), but it is much higher than according to the L2CU 2018 baseline survey (27%). A shortcoming of the HBS‐based analysis is that the employment status can be defined only for household members who were present in the household at the time of the survey and who worked in the last seven days prior to the survey (i.e., information about employment status of internal and international labor migrants is unknown). 52 World Bank (2020b). 53 Carraro, Honorati, and Salazar (2019); Seitz (2019).
051015202530
Rep
ublic of
Karakalpakstan
Andijan
Bukhara
Jizzakh
Kashkadarya
Navoi
Nam
angan
Samarkand
Surkhandarya
Syrdarya
Tashkent
Fergana
Khorezm
Tashkent city
Uzbekistan
(Total)
16‐24 25‐34 35‐44 45‐54 55‐64
18
migrants.54 The incidence of international labor migration dipped during the pandemic crisis and has been
picking up in recent months. In August 2020, the share of households with members currently abroad was
5.7 percentage points lower than in September 2018. The share of working‐age population working
abroad has also declined: from 4.8 percent in September 2018 to 3.4 percent in August 2020 (Figure 10).
Russia is the major destination for Uzbek labor migrants; Kazakhstan is the second destination for total
population and for males; and Turkey is the third destination.
Qualitative evidence confirms that local labor conditions, mostly low wages, push unemployed youth
to consider international migration, while internal migration is less attractive. Focus group discussions
conducted with unemployed youth and recent graduates in 2020 confirm that low wages are the main
cause for considering migration. International labor migration is perceived by the most unemployed youth
as almost the only option to work and earn decent wages. Internal migration happens at a much lower
scale as wages in Tashkent are less attractive than migrating abroad and the cost of living is higher. This is
true especially for (based on our discussions and consistent with HBS and L2CU data)55 male youth in rural
districts. Youth in Tashkent have lower aspirations to migrate for “traditional” types of low‐skill jobs that
Uzbek migrants have in Russia; in their views, Tashkent offers more opportunities to find jobs with
reasonable salaries. A recent UNICEF study finds that Uzbek youth show an exceptional sense of belonging
to their home villages and cities, migrating as a last resort.56
"More and more people are leaving here to work abroad because of low wages, they only went there because of the lack of jobs, people who were working would not leave their jobs and go abroad to work."
Unemployed woman, age 24, Khonka District
The highest incidence of labor migration is among young men and from rural areas. The bulk of labor
migrants is age 25‐34 and the very large majority of migrants (about 90 percent) is men. Women, the
remaining 10 percent, migrate almost exclusively to Turkey57 where they are mainly employed in
housework and caring for the elderly and children. This low out‐migration by women is, based on
discussions in the focus group, attributed to discouragement by the family and the community. In
addition, youth from the Khorezm region reported that young unmarried girls are not allowed to migrate.
Another reason for the small share of women among labor migrants is the nature of jobs abroad. In Russia,
the main destination country, migrants work predominately in construction and physical labor, where the
demand for women is extremely small. The majority come from rural areas rather than urban. Most labor
migrants come from the Republic of Karakalpakstan, very few from Tashkent city. In most regions,58 the
percentage of migrants from rural and peri‐urban areas is higher than from urban areas.
“Women also migrate. For example, divorced women. There are women who can't feed their children on alimony, are not satisfied with their work here, and go to labor migration without being satisfied with their monthly salary. Married women are not allowed to migrate. Because the reputation of women who migrate will
54 HBS 2017 estimates are consistent with L2CU 2018 estimates. 55 World Bank (2020) confirms all patterns estimated based on quantitative surveys, including in terms of main destination countries being the Russian Federation, Kazakhstan, South Korea and Turkey. 56 UNICEF 2020. 57 Based on L2CU 2018 high‐frequency data. 58 Except for Bukhara, Fergana, and Samarkand provinces.
19
be bad. No one knows what she did there. There will be questions about how she made money. Only married women can go with their husbands.”
Unemployed woman, age 24, Khiva city
The majority of international labor migrants have vocational education. Nearly 60 percent of migrants
have vocational education; 30 percent of migrants have upper secondary education; and less than 4
percent have tertiary education (compared to 45, 30, and 11 percent among non‐migrants, respectively).
The incidence of migration among working‐age individuals with a vocational diploma is 7.7 percent,
compared to 2 percent among their tertiary educated peers.
Many Uzbek migrants are engaged in informal jobs. The share of organized labor migration through
formal state channels is estimated to be 6 percent of the total international Uzbek labor migrants (based
on MELR data). Organized labor migration is regulated by the Agency for External Labor Migration under
the MELR. With the exception of migrants in Turkey, many Uzbek migrants tend to work informally, about
44 percent on average between May and August 2020. The share of migrants with informal jobs is higher
in Kazakhstan and the Republic of Korea (81.5 and 66 percent, respectively). Almost half of Uzbek migrants
living in South Korea and the United States were not working at the time of the survey (reason is
unknown). The share of migrants not working was particularly high in April and May 2020, obviously due
to the COVID‐19‐related lockdown. To the contrary, about 90 percent of migrants in Russia, Kazakhstan,
and Turkey report to be employed.
Figure 10 : Incidence of labor migration, 2018‐2020 (%)
Source: L2CU 2018 baseline and high‐frequency (monthly) follow‐up data (World Bank 2018).
20
3. Youth aspirations and perceived constraints to employment
This section builds on qualitative findings from focus groups held with 267 youth (of different employment
status and gender) and 22 key informants, across four regions (World Bank (2020)). The data was collected
between January and March 2020 (pre‐pandemic). Annex 1 presents the sampling and methodology in
more detail.
Education decisions and career aspirations are shaped by individual preferences and expected returns
from education. Accurate information about labor market returns plays a key role for the decision to
invest in skills development and to shape job aspirations. Generally, the decision on when to stop studying
relates mainly to the choice of occupation and the optimal timing for entering the labor market, when the
decision is not driven by socioeconomic and other exogenous factors such as the need to earn or to
provide care to family members. When accurate information is available on career opportunities at
different education levels and on expected wages, youth can compare alternative career pathways and
also choose the optimal educational investment. However, in most cases, information is not complete or
accessible. If, for example, information on occupational wage differentials is difficult to obtain, students
may underestimate the returns of a specific educational degree or discount future labor market
opportunities in their choice of field and subsequent occupation.
Uzbek graduates make their education and professional career choices based on perceived interests,
preferences, and ambition. Qualitative data collected with graduate students reveal that youth
aspirations among recent graduates and students are formed on the basis of their personal interests and
ambitions, and observations, as well as their perception of the labor market, the credibility and prestige
of a particular profession, and the expected earnings. The main factors shaping recent Uzbek graduates’
career aspirations and occupation choices are: (i) a well‐paid job with good working conditions; (ii)
professional preference; (iii) prestigious and honorable jobs, such as military affairs; and (iv) the possibility
to access foreign tertiary educational institutes. The aspiration to further invest in skills development
abroad is related to the perceived higher return of education abroad, the perceived better quality of
foreign universities, and the perceived lower cost of tertiary education (the cost of training in some foreign
universities was reported to be lower than in Uzbekistan).
These findings point to the absence of in‐school career orientation and limited labor market information
among students. Youth reported that career guidance systems are not well established in schools. Career
guidance functions are assigned to school psychologists who do not have any skills or professional training
to guide the careers of youth. Students and recent graduate are not aware of which occupations are more
in demand, entry wage levels, or general labor market prospects and returns to education. Nonetheless,
recent graduates adjust their aspirations and professional choices to self‐employment opportunities in
contexts with limited wage employment opportunities.
Aspirations become less ambitious as youth try to transition from school to work. Big plans are held
mainly by recent graduates and students, while aspirations are modest among other groups of youth who
participated in focus group discussions. Young unemployed and young workers are more realistic about
their labor market prospects and see their opportunities as limited. School graduates are removed from
the real situation in the labor market and the potential application of their capabilities. Aspirations among
employed and unemployed youth are shaped by the following key aspects of a job: salary, working
21
conditions and work schedule, preference, distance to work, good attitude from the company
management, and formality or level of benefits.59
Some job characteristics are more important than others in shaping the aspirations of youth subgroups.
For example, young women value the level of job protection more than young men. Professional
preferences play a much larger role among school graduates than among young unemployed and workers.
Work schedule flexibility60 is reported as an important factor mostly by young women in cities and rural
areas because it enables them to combine work with housework and childcare. For most women, it is
important to find a job in their area of education;61 if this is not possible, they are ready to work at home
and as a dressmaker. Urban graduates are more likely to apply to universities; they discount the possibility
of not being admitted and plan for a second attempt to enroll in university.
Parents have limited influence in educational and career decisions with young men. The qualitative
study indicates that only few parents have an understanding of employment opportunities to give useful
advice and recommendations to their children. Only few parents have an understanding of employment
opportunities to give useful advice and recommendations to their children on career decisions and job
search. Overall, parents largely do not understand or intervene in their son’s job search process but
parents do intervene in their daughters’ job search or migration decision. For example, when a young
woman plans to work in a hotel or an overnight job, parents oppose, try to dissuade, or forbid such a
choice. Most young men consult with their parents about their education and job decisions but decide on
their own where work. In contrast, most young women have less chance to make their own decisions
about work even when they voice their choice of profession and place of work in the family circle. This is
reported by youth in both rural and urban areas.
Aspirations for wage jobs and perceived constraints
Formality and salary levels are the main drivers of jobs aspirations. Salary is the most important factor
shaping aspirations for all youth subgroups, including for rural and urban youth. Opening an employment
record book and the accrual of work experience in accordance with the legislation is desired by all youth.
Most youth noted that they are hired without formal registration and without opening an employment
record book. Informality is, in fact, widespread in Uzbekistan, accounting for almost 60 percent of wage
employment.62 The exception is the city of Tashkent where interviewed youth noted that employers
follow the legislated employment process and formally register their employees.
But youth wage expectations are high compared to local markets wages. Overall, participants of the
focus group discussions sometimes expressed wage expectations more than double the actual earnings
in a first‐time job. Wage expectations were 2‐3 times greater than the real wages among employed youth
who participated in the discussions. This is not due to unreasonably high expectation among youth, but
rather to low wages among young workers. Most of the young public and private sector workers reported
59 The accrual of work seniority was reported as one of desired job characteristics. This is related to the fact that the
work seniority determines the size of the pension and other social insurance benefits. 60 World Bank (2020) shows that disruption of working hours (10‐12 hours working per day) in organizations and enterprises of the private sector is quite common. 61 Most women have a specialty in primary school teacher, kindergarten teacher, nurse, dressmaker. 62 Ministry of Employment and Labor Relations (MELR).
22
receiving UZS 600,000‐1,000,000 per month. This is consistent with HBS 2017 data but lower than the
State Statistical Committee data. The total mean monthly earnings of employees was UZS 795,000 (UZS
710,000 is the median) according to HBS 2017 and UZS 1,457,778 according to the State Statistical
Committee for the same year.63 The median (mean) monthly salary is UZS 600,000 (UZS 657,000) among
age 16‐24 and UZS 735,000 (UZS 813,000) among age 25‐34 based on HBS 201764 (Figure 11). The
reservation wage differs in Tashkent and in rural areas. In Tashkent, youth aspire to earn UZS 2.5‐4 million
per month; in rural areas, youth will settle for UZS 0.8 ‐1.5 million per month. In the central cities of Khiva,
Margilan, and Samarkand, salary expectations are UZS 2 million per month.
Figure 11 : Young workers are vulnerable to low wages
Source(s): Based HBS 2017 (SSSU 2017)
Note: Underlying population group is age 16 and older, reporting median monthly earnings of employees and self‐
employed workers (UZS). Wages reported in UZS. Zero values for reported earnings are disregarded.
Aspirations are higher for private sector jobs. Unemployed youth prefer to search for work in the private
sector as, in their opinion, the salary levels are higher than in the public sector. There is no current
comparative data on public‐private sector compensation for different occupational groups. In Tashkent,
the monthly salary of the Chief Doctor in the private sector is over four times more than that of the public
sector; the private‐public wage disparity for non‐medical positions such as service engineer and economist
are even higher at 11 times and 8 times, respectively.65 Respondents from Tashkent expect the highest
63 According to the State Statistical Committee data (2017), the largest average net wages were in financial and insurance activities (UZS 2,694,136), whereas according to the HBS‐based statistics, the largest average net wages were in public administration (average earnings UZS 1,311,841), perhaps due to allowances and social insurance benefits. 64 The relationship between the level of education and median earnings is not monotonic: the least educated workers
report higher earnings than workers with secondary or post‐secondary non‐tertiary education, whereas the median
earnings of workers with medium‐level education show little difference. It is crucial to have the data on the number
of hours (actually) worked, occupation, firm size, ownership, and other important job characteristics to perform the
decomposition analysis of the determinants of the gender pay gap or to assess returns to education in a Mincerian‐
type regression. These data are missing in HBS 2017. 65 World Bank (2020d).
0
200,000
400,000
600,000
800,000
1,000,000
Male
Female
Primary ed
ucation or
less
Lower secondary
Upper secondary
Post‐secondary non‐
tertiary Te
rtiary
16‐24
25‐34
35‐44
45‐54
55‐64
65+
Employees Self‐employed
23
wages among occupations in the modern service sector such as programmers and IT specialists, tourist
guides, interpreters, and managers of private companies. Jobs in foreign companies and the tourism
sector are particularly appealing to young graduates. Youth are increasingly choosing to learn foreign
languages as a way to increase their chance of working in the tourism sector.
“For men, 1 million sum a month is low. 3-4 million is enough for men. It is also acceptable for women to earn less because their husbands provide for them.”
Unemployed man, age 24, Khiva city
Career prospects are not reported by youth as among the important determinants for choosing a job.
Many participants believe career issues pertain only to public sector jobs, more precisely in the
government. In addition, the private sector in the regions outside of Tashkent is mainly represented by
small enterprises with a defined management structure that does not lend to possible career mobility
aspirations. Only interviewed youth in the city of Tashkent, who aspire to work in the government and in
large private companies, include career prospects in their job aspirations.
Low wages and weak labor demand are the main constraints to employment, creating discouragement
and migration incentives, as perceived by youth. Low wages and limited labor demand are seen as the
main causes of unemployment and a push factor to migrate. Wages are so low that in some cases they do
not even compensate the cost of going to work (transportation, food, and uniform). Low wages also create
frustration among youth as they perceive subpar remuneration. Wages are especially low and available
formal jobs are limited for youth in rural areas and small towns. Hence, rural youth either migrate or
engage in one‐time unskilled jobs, depriving them of opportunities for professional growth and
continuous training.
Lack of previous work experience is the second barrier to employment, as perceived by youth. Youth
reported that most vacancies advertised in the main job portals require previous work experience,
regardless of the type and complexity of work. Often, a relevant diploma is not enough to get a job. This
is to some extent due to the low quality of professional training in colleges and universities. Hence,
employers value diplomas less than previous work experience.
“I graduated from college and went into the army. After I passed the service, I wanted to get a job in a factory. At the factory, employers said I had to have at least 5 years of experience to get a job there. I had no work experience. It would be better if college graduates were not asked for a work experience, youth should be hired for a probationary period, to see if they could do the job. If they pass the probationary period well, they should be hired.”
Ulugbek, Employed man, age 23, Margilan city
The high value placed by employers on work experience attests to distrust in the secondary specialized
professional education system. Among interviewed youth, professional vocational education does not
guarantee even the minimum knowledge and skills in the acquired profession. Among employers,
secondary specialized professional education does not inspire trust in its graduates. In 2020, about
470,000 students graduated from secondary specialized professional colleges. Every year, the majority of
educated youth graduate with low or immaterial qualifications enter the labor market.
24
Young professional college graduates are aware of the skills mismatch. The secondary professional
education system is inadequate and leads many graduates into unemployment, followed by one or two
years of re‐training at Employment Support Centers, based on interviews with youth. Young professional
college graduates perceive they are not equipped with the relevant technical and socio‐emotional skills
required by employers. A socioemotional skills assessment carried out in 2018 shows that Uzbek students
report low levels of perseverance and responsibility, which are highly valued by employers. In addition, a
large proportion of grade 9 students self‐evaluated their skills below the midpoint, especially in engaging
with others, managing negative emotions, and broadening horizons.66
The mismatch between the supply and demand of university graduates is another factor contributing
to the general skills mismatch. As described in section 2, tertiary education is limited in Uzbekistan by a
quota system. There is evidence of high over‐subscription with low enrollment. Interviewed youth who
had applied for jobs and were rejected claimed they were rejected for lack of a higher education diploma
(compared with secondary education diploma). In addition, they are aware that given the low quality of
the secondary specialized professional education system, employers look for higher education diplomas
even for jobs requiring technical skills from specialized professional training.
"The lack of a diploma is one of the biggest obstacles for young people to work, because everyone wants to work with a higher education, but not everyone has the opportunity to do so."
Anonymous, FGD with Unemployed youth
For these reasons, labor migration is perceived by most youth – mostly young men – as almost the only
option to work and earn decent wages. Youth reported the average wage of labor migrants is
approximately $500 per month in Russia, between $350 and $500 per month for prospect young migrants
planning to migrate to Kazakhstan and Turkey, and about $2,000 per months for those planning to migrate
to South Korea. South Korea organizes and regulates migration through the Agency for External Labor
Migration under MELR, thus the expected higher wage; whereas most labor migrants who travel to Russia,
Kazakhstan, and Turkey migrate through other channels and perform unskilled and low‐paid jobs.
Social stereotypes and cultural norms have a profound impact on young women’ participation in
economic activities and access to employment opportunities. According to the participants of focus
group discussions, in many families, spouses and young women are not allowed to work. as their main
function is perceived for housekeeping, caring and raising children, and caring for elderly family
members.67 If a young woman is well off, then she does not need to work and is not expected to work. There are also shared opinions that working in enterprises harms the reputation and moral character of a
woman. These social and cultural norms contribute to explain the large gender gap in labor force
participation. Youth also report that the main constraints to employ young women are bans in certain
66 World Bank (2018a). A World Bank Survey of Socioemotional Skills in Uzbekistan was carried out with grade 9 students in 2018. It asked the students to self‐rate their levels of socioemotional skills over a diverse set of socioemotional facets. This survey covered a representative sample of 2,140 students in 30 schools in Tashkent City and 30 schools in Tashkent Region, with the probability of a particular school being selected proportional to student body size. 67 Given that the majority of Uzbek households are nuclear multi‐families nuclear with 6‐8 members, on average, there is a lot of housework to do. In addition, lack of access to communal infrastructure (i.e., water supply, centralized gas supply, sewage) in a significant part of many rural settlements increases the burden of housework on women. In addition, it is generally believed that a woman can be busy in “tomorka (household garden)”.
25
industries/fields, restrictions on territorial mobility, and household responsibilities. Young women rarely
study in large cities because of socio‐cultural constraints and parents unwilling to expose them to the risks
associated with democratic morals and lifestyle in large cities and to leave them without guardianship.
Socio‐cultural norms and employer discrimination also contribute to the gender pay gap. Almost all
youth participants of focus group discussions, both men and women, believe a woman’s salary can be
lower than a man’s salary for the same job/occupation. An analysis of HBS 2017 data shows that men earn
26 percent more on average than women (Figure 11). Men are the undisputed breadwinners of the family
and a gender pay gap is relatively well accepted in the population.68 It is noteworthy that in the regions,
it is considered fair that men earn more because the higher salary allows them to save up money for the
wedding and building a house for the family. The reservation wage differs among men and women: in
cities (except Tashkent) and villages, young women expect a salary of UZS 800,000 per month. Youth
respondents also indicate that for the same job employers offer young women lower wages than men
because women cannot work overtime or perform heavy physical work.
“In the past, you could find a job after graduating from a pedagogical college, employers didn’t ask for a higher education when hiring. Now they are asking for higher education. You have to study and pay the tuition fee to get higher education, the tuition fee is extremely expensive. If big factories opened here and salary was 1 million sum a month, everyone will go and work. Young people are going abroad to work. We have a low monthly salary of 600-700 thousand sum. It does not cover lunch money, transportation expenses. There is nepotism in hiring.” (Employers only take their relatives, friends, and acquaintances for available jobs.)
Dilnoza, Unemployed woman, age 25, Margilan city
Aspirations for entrepreneurship and perceived constraints
There is high interest among youth to start up small businesses. Recent graduates have business ideas
and intend to establish their own business, mainly in trade and manufacturing. While Uzbek women have
traditionally been characterized by low entrepreneurial activity, young women are interested in and want
to establish businesses, though they would not do it without the permission of the spouse or family
members. In sum, young men are much more likely to make entrepreneurial plans than young women,
while rural youth have significantly lower entrepreneurial intentions. This result may be in part due to
limited opportunities for starting and running businesses in rural areas.
Entrepreneurship is seen as a pathway to earn more. Interest in self‐employment is high, especially in
the cities of Margilan and Samarkand and in the countryside. Young men are interested in starting
entrepreneurial activities in trade; building a greenhouse; and opening a cafe/canteen; a workshop to
manufacture furniture, windows, and doors; a workshop to repair cars; a bakery; and a training center.
Young women are interested in starting entrepreneurial activities – if their parents and husbands agree –
in opening a sewing workshop, a mini pastry shop, and a mini kindergarten. Youth in the city of Tashkent
68 However, a paragraph on ensuring equal pay for equal work of equal value was added to Article 26 "Employer's Obligations" of Chapter 3 "Concept, Subjects, and Grounds for the Emergence of Individual Labor Relations" of the Draft Labor Code in the new version and a law was adopted in 2019 to guarantee equal opportunities (Law of the Republic of Uzbekistan No. ZRU‐562 dated September 2, 2019 "On guarantees of equal rights and opportunities for women and men").
26
are interested in starting entrepreneurial activities in providing IT services; providing design and print
services; and opening a store, a workshop to repair cars, a workshop to repair equipment, and a car wash.
However, youth face constraints to access sustainable self‐employment. Youth report the following
constraints for entrepreneurship, by order of importance: (i) lack of knowledge and skills necessary for
doing business; (ii) lack of training opportunities leading to weak business plans; (iii) limited access to soft
loans69 (commercial banks limiting amounts of soft loans; practice of some banks which provide normal
interest rates rather than soft rates); (iv) high competition with established firms in the market of goods
and services; and (v) limited local consumer markets in rural areas.70 Despite government initiatives to
promote youth and women entrepreneurship,71 less attention has been paid so far to the development
of the necessary skills and practices to start a business (e.g., basic accounting, developing a business plan,
socioemotional, and personal) as reported by representatives of Youth Union and Chamber of Commerce.
Although some organizations in Uzbekistan do provide training to entrepreneurs, they do not provide
training oriented toward youth. Further, this type of training is very scant in Uzbekistan, especially in rural
areas.
“Young people need to study entrepreneurship. Many young people start a business but are unable to do so and close the business. Ten percent of the young people who applied to us were able to start a business, 90 percent started a business, but could not run it and closed it.
Youth Union representative, Samarkand city, male
Young women face additional barriers to entrepreneurship. Further constraints include the burden of
domestic responsibilities and becoming the main breadwinner when men migrate for work and lower
mobility. A lack of property ownership among women weakens their access to and control of finances due
to their inability to provide collateral to the bank.
The take‐up of soft loans is low because the subsidized loan amounts are low and the quality of business
plans is inadequate according to banks. Loan products allocated in support of youth entrepreneurship
are mainly microloans in the amount of up to UZS 63 million (100 times the minimum wage) (Box 3). This
amount, of course, may not be enough to conduct a full‐fledged, profitable business. It should be noted,
however, that some young entrepreneurs, especially women, often prefer small loans to increase the
chance of repayment. As a result, these microloans lead to start up individual businesses rather than to
hire additional employees. On the other hand, commercial banks are extremely cautious in lending to
youth businesses given the accompanying risks. According to bank representatives, the main reason for
69 Soft loans have preferential interest rates (below market). In the case of Uzbekistan, soft loans are subsidized
loans at 7% as of 2019. 70 The limited local consumer markets in rural areas is mainly due to the limited diversification of consumption and
the presence of domestic production of some foodstuffs and other small consumer goods. 71 Decrees of the President No. 5466 on the state program "Yoshlar ‐ Kelajagimiz" (“Youth is Our Future”); No. UP‐
5106 “On measures to increase the effectiveness of state youth policy and support the activities of the Youth Union
of Uzbekistan”; No. UP‐4232 “On additional measures to attract graduates of educational institutions to business”;
Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No. 834 “On organizational measures to create
clusters of youth entrepreneurship". "Regulation on the allocation of microcredit by commercial banks to graduates
of professional colleges" adopted by the Central Bank of Uzbekistan creates a legal framework to support youth
entrepreneurship.
27
this phenomenon is weak business plans presented by potential young entrepreneurs. Hence, commercial
banks face the problem of underutilized funds and unmet target parameters of the government programs.
Box 3 : Subsidized microloans and access to capital for entrepreneurs
In accordance with its job creation priority, since 2017, the Government of Uzbekistan has developed subsidized
microfinance lending to support entrepreneurship (7 trillion sums equivalent to $816.5 million allocated to
microfinance programs in 2019).72 “Every Family is an Entrepreneur” is the largest of subsidized lending programs,
started in 2018 and expanded in 2019.73 Subsidized lending programs are channeled through state‐owned banks and
are primarily “in‐kind” in the sense that borrowers do not receive the loan amount but a product purchased with
the loan amount (among a list of pre‐approved products, machinery, or livestock). Youth belong to most of the target
groups benefitting from subsidized loans under the different public programs. The main program targeting youth is
"Yoshlar ‐ Kelajagimiz" (“Youth is our future”).74
Outside of the lending programs, entrepreneurs can access microcredit through commercial banks and microfinance
institutions. This sector is again primarily state‐owned, consisting of 42 microcredit organizations and 55 pawnshops,
along with 29 commercial banks and state‐owned banks offering microfinance services.
There are three main microfinance products: (i) microloans to individuals in the amount of up to 100 times the
minimum wage; (ii) microcredit to registered businesses or entrepreneurs in the amount of up to 1,000 times the
minimum wage; and (iii) micro‐lease to registered businesses or entrepreneurs in the amount of up to 2,000 times
the minimum wage.
Subsidized loans are mandated at 8% interest rates (or lower). State‐owned microcredit organizations (e.g.,
Microcredit Bank) can propose other microloans or microcredits at a rate below their refinancing rate (i.e., below
16%). Private microcredit organizations typically charge higher interest rates due to their cost of funds and risks,
with microloans interest rates at 62% on average, and microcredit and micolease rates at 48% on average. Access to
commercial banks is low due to high collateral requirements.
The main challenges for entrepreneurs who need access to capital is the lack of financial products tailored to their
needs (in particular, in the case of subsidized lending programs that cannot support the need for working capital)
and the collateral requirements (for commercial loans). Entrepreneurs face a “credit crunch” in the market, with a
limited private microfinance sector that is not growing due to competition with subsidized lending rates and has not
yet started to lend with alternatives to collateral requirements (e.g., cash flow analysis and borrowing capacity to
manage risk).
Source: IFC (2019).
Affordability and bad lending practices limit access to and use of microloans. Loans allocated under
subsidized lending programs should be provided at low interest rates (annual 8 percent rate or lower),
and without collateral request. However, the majority of interviewed youth who applied for soft loans
claim that they were offered loans at higher rates, as with ordinary commercial loans. Another barrier
72 There is also budget supporting credit subsidies (among others) allocated to other entities such as the Youth Fund (500 billion sums in 2019), the Employment Assistance Fund (300 billion sums in 2019) and the Welfare Fund (500 billion sums in 2019). 73 The seven main subsidized lending programs are: Every Family is an Entrepreneur; Youth Is Our future; Developing Craftsmanship; Farmer’s Program; Job Creation & Entrepreneurship; Support of Women and Family; and Funds of Local Khokimiyats. 74 See footnote 71 on the decree and related regulations.
28
that limits the full use of loans by potential young entrepreneurs is their “in‐kind” nature, as the loan
amount is directly transferred to the accounts of trading companies and suppliers of goods for the
purchase of equipment or other goods and raw materials rather than direct lending to the young
entrepreneurs. Thus, commercial banks eliminate the risk of misuse of the loan. On the other hand, the
supplier companies sell goods or equipment at inflated prices, which often makes the proposed business
unprofitable. Finally, youth complain about unfair practices and corruption by bank employees. These
issues are especially relevant in rural areas where the number of banks is limited.
Cities and semi‐urban areas are seen as more conducive to youth entrepreneurship. In general, the
results of the study show that programs aimed at supporting youth entrepreneurship are more effectively
implemented in cities. Compared to other cities, Tashkent has the best conditions for doing business, due
to the size of the market and more developed financial institutions. This is primarily due to relatively
higher resources allocated as well as a more serious attitude to monitor the implementation of these
programs.
Discouragement
Discouragement among youth is increasing. While urban youth tend to be much more vocal about their
challenges and aspirations, and highly visible in their job‐seeking, millions of young men and women in
rural and semi‐urban areas struggle to find jobs and become discouraged. Contrary to unemployed who
keep looking for an opportunity, discouraged individuals are available for work but do not seek
employment for labor market‐related reasons (e.g., past failure to find a suitable job, lack of experience,
or belief that no jobs are available), thereby dropping out of the labor market and becoming inactive.
Some youth became inactive because of a loss of hope for employment, especially in rural area. The
official HBS 2017 data do not allow us to quantify the extent of discouragement, as it was not captured in
the questionnaire. The discouragement rate is 5 percent among age 15‐24 in Uzbekistan, compared to
less than 2.5 percent in neighboring ECA countries, based on L2CU 2018 (Figure 5).75
Economic inactivity is mostly observed among young women, mostly due to family care duties and
housework. The reported reasons for inactivity among women are housework, caring for children and
elderly family members, and poor access to kindergarten services, especially in rural areas. While
inactivity among women is a cultural norm, inactivity among men (as the breadwinners) is not acceptable,
based on focus group discussions. Participants also recognize that young women’s economic inactivity
leads to early marriage and motherhood and practically deprives the young woman of her plans for
employment and education.
75 See footnote 40 for measurement definitions.
29
4. Recruiting youth: What do employers look for? What do youth look
for?
This section and the following one build on findings from quantitative data from 560 employers of small,
medium, and large firms, across six regions (World Bank (2021)). The results are representative for
registered firms (sampled from the business registry) by firm size, sectors (three aggregated sectors), and
regions (Tashkent region versus five other regions). The data were collected by phone interviews between
December 2020 and March 2021. Annex 2 presents the sampling and methodology in more details.
Challenges in recruiting young workers
The main challenge employers face when hiring young people is related to youth’s limited readiness to
work due to lack of work experience and required skills. Lack of required skills and work experience is
the main hiring constraint reported by employers (69 percent of firms, Figure 12). In fact, when asked
about how they perceive youth applications for positions (e.g., looking at their CV), recruiters also
highlight the lack of previous work experience as the major reason for youth to be less as well as the lack
of relevant education background (Figure 13). Youth interviewed in the focus group also report that their
main constraint to access employment in the private sector is the requirement to have previous
experience related to the position. The lack of relevant educational background identified by recruiters in
youth CVs could be interpreted either as educational institutions do not provide adequate skills for the
available jobs or youth pursue studies in fields that are not in sufficiently high demand by employers.
Figure 12: Constraints faced by firms when hiring young workers (% firms reporting the constraint)
Source: World Bank (2021).
Note: See methodology in Annex 2.
26%
27%
44%
62%
69%
0% 20% 40% 60% 80%
Applicants did not like working conditions (time,dust, place, hard work, temperature, etc.)
Applicants consider that the firm is too far(travel time, transport costs)
Not enough people applying for the position
Applicants expected wages higher than whatyou can offer
Applicants lacked the required skills or requiredwork experience
30
Figure 13 : Reason for rejecting job applications by young candidates (% firms)
Source: World Bank (2021).
Note: See methodology in Annex 2.
The lack of adequate technical skills and basic education among workers, especially youth, are reported
to be the second most severe labor‐related constraint to firm growth after high payroll taxes (social
contributions). The inadequacy of skills is not only a constraint to hire youth but is also cited as the second
labor‐related constraint for firms that are trying to grow. Around a third of firms report both “inadequate
general skills” and “inadequate technical skills” among their top three worker‐related (labor) constraints
preventing growth (
Figure 14). The lack of work experience is also reported as an important constraint faced by a third of
firms. Beside skills and work experience, the level of payroll taxes still remains a major constraint to firms’
growth (40 percent of firms), consistent with the Enterprise Survey 201976 (see Box 4).
Box 4 : Firms' tax constraints and 2019 Tax reform
Firms consider payroll taxes as a major constraint, among the labor‐related constraints (based on our Firm Youth
Employment Survey 2021) and among all investment climate obstacles (based on the Enterprise Survey 2019).
The payroll taxes rate is not excessive for the region (Doing Business 2020) and, overall, it has decreased since the
introduction of the new Tax Code in 2019. Uzbekistan’s ranking in Doing Business of the “total tax and contribution
rate (% of profit)” – which also includes VAT, sales taxes, and labor taxes – is 31 percent, average in the region (Doing
Business 2020). According to the new Tax Code introduced in 2019, employers’ contributions have decreased from
25 to 12 percent for large private firms and 15 to 12 percent for small and micro private firms (while remaining at
25 percent for state‐owned enterprises). The objective of the reform was to reduce informality and foster the
development of the private sector. However, based on our Firm Youth Employment Survey, it did not substantially
76 While the question is not directly comparable (measuring general constraints to growth in the Uzbekistan Enterprise Survey (World Bank 2019b) versus focusing on labor constraints in the Youth Employment Firm Survey (World Bank 2021), taxation comes as the biggest investment climate obstacle for doing business, reported as an obstacle by 23% of firms.
1%
2%
5%
16%
32%
53%
0% 10% 20% 30% 40% 50% 60%
Everything suits me
Difficult to answer
Format of the CV
Lack of a relevant education background /cursus
Did not receive CV from young candidates
Level of previous work experience in years
31
affect employers’ perception. As there are other taxes on gross salaries that are withheld by employers, it is also
possible that employers in our survey perceive the overall gross tax rates hence report it as a major constraint. In
particular, the personal income tax is withheld by employers on the gross salary of workers at a flat rate of 12%.
Gross salaries need to be high to maintain competitive net earnings for workers. Our survey shows indeed that (net)
wages are key to attract and retain workers.
Employee’s social insurance contributions:
Before 2019 reform:
• Social security contribution was 8% of the gross salary for the Off‐Budgetary Pension Fund, withheld by
employer.
• Contribution of 2%, taken from personal income tax (PIT) for individual pension savings account. Note that
before the reform, PIT rates were progressive from 0% to 23%.
After 2019 reform
• Social security contribution is dropped.
• Contribution to individual savings pension accounts has been reduced to 0.1% (of labor income). The
contribution is deducted from PIT and it is withheld by employers.
Employers’ social insurance contributions:
Before 2019 reform:
• Unified social payment was 25% of gross payroll for all firms and 15% for micro and small private enterprises
including agricultural workers.
• Mandatory contributions to the State Trust Fund of 3.2% of gross revenues, out of which 1.6% to the Off‐
Budgetary Pension Fund (social security), 1.4% to the Republican Road Fund, the remaining to the Off‐Budgetary
Fund for the Development of the Material and Technical Base of Educational and Medical Institutions.
After 2019 reform:
• Unified social payment (renamed Social Tax in 2020) was reduced to 12% of the gross payroll paid to the Pension
Fund for all private firms (whatever the size) including new categories of taxpayers, individual entrepreneurs
and their employees, members of family enterprises, farming enterprises, and artisans, and remained at 25%
for SOEs. Out of this, 0.1% goes to the Employment Fund covering Unemployment assistance and ALMPs.
• Mandatory contribution to the State Trust Fund was dropped.
Source: World Bank (2020g) and World Bank (2019).
32
Figure 14 : Perceived labor‐related constraints to firm growth (% firms reporting the constraint as
important or severe)
Source: World Bank (2021).
Note: See methodology in Annex 2. Percent of firms reporting that the constraint is important or severe, for each of
the nine listed constraints above. This question is based on the STEP Survey.
Another challenge employers face in hiring is the high salary expectations of youth. Excessively high
wage expectations are the second main challenge faced by firms trying to recruit youth (62 percent of
firms, Figure 12). This is also reflected in the contract negotiations recruiters have with young candidates.
Eighty‐two percent of firms report that youth try to negotiate the wage, while other aspects of the
contracts are much less debated (e.g., the second‐most‐frequent object of negotiation is the daily working
hours, reported by only 27.5 percent of firms). While we do not know the share of firms’ offers that are
rejected because the offered wage is too low compared to the candidate’s expectations, the most
common reason for youth to quit a job is poaching from other firms, followed by low level of salaries.77
Based on this evidence, wages are likely to play an important role in attracting and retaining workers. This
finding is consistent with the focus groups discussions as described in the previous section. Salary was
ranked by youth as their main priority when considering a future job, well before their interest for the
occupation, and similarly for men and women. Interestingly, this also relates to the finding that monetary
incentives, such as wage increases, are the main source of motivation for employees.78
Nevertheless, youth are attractive candidates for employers who value their motivation and desire to
learn (rather than their technical skills). Despite the challenges, youth remain attractive to employers. In
fact, most employers interviewed would like to see more youth among job applicants (65 percent of
firms). Employers value youth motivation and desire to learn, two strengths that are reported by at least
half of the firms as well as the ability of youth to adapt to work conditions (23 percent of firms, Figure 15).
77 This finding is consistent with a pilot survey conducted by MELR in 2019. Another job offer is the second reported reason for youth layoff, after family circumstances (MELR 2019). 78 MELR (2019).
20%
20%
23%
26%
31%
31%
31%
33%
39%
0% 10% 20% 30% 40% 50%
Too high Minimum wage
Lack of job applications, lack of workers for vacancies
Employment protection legislation/ labor code, for example…
Too high overall wage level in your firm's sector
Workers who do not have previous good work experience
Turnover of workers
Inadequate technical skills or workers who do not have the…
Inadequate general (basic) education of workers
Too high payroll taxes and social security contributions
33
Employers’ perceptions of youth strengths differ by type of firm. Computer‐related skills, usually seen as
an asset among younger workers, do not come up as a main strength on average (only 16 percent of firms
report it) though computer‐related skills are more valued among firms which experienced positive growth
(21 percent of those firms), as well as firms operating in the retail sector (20 percent of firms in this
sector).7980 Similarly, the fact that youth received relatively “up‐to‐date” knowledge through their
education does not come up on average across all firms but is more frequently reported as an advantage
over other workers by internationally oriented firms (19 percent of those firms) as well as in the other
services sector (22 percent of firms in services).81
79 The survey frame allows reporting statistically representative estimates for the three sectors used for sampling, which definition is based on NACE taxonomy. “Manufacturing and construction” sectors correspond to NACE C and F. “Wholesale and retail” correspond to NACE G (referred as “retail” in figures). “Other services” sectors (referred as “other services” in figures) correspond to transportation and storage (NACE H), accommodation and catering (NACE I), information and communication (NACE J), financial and insurance activities (NACE K), real estate services (NACE L), professional, scientific and technical activities (NACE M), management and support services (NACE N), education (NACE P), health and social services (NACE Q), arts and entertainment (NACE R), and other services (NACE S). Agriculture, mining industry, electricity and water supply sectors (NACE A, B, D and E) were excluded from the frame. Note that while public sector firms (SOEs) where not excluded from the frame (information not available in the frame), they only represent 3% of respondents. 80 Firms with positive or stable growth (respectively firms with negative growth) have experienced an increase or stable volume of sales in the month preceding the survey compared to the previous year (respectively a decrease in the volume of sales). Firms with positive growth represent 48% of the surveyed firms. 81 Internationally oriented report at least one business contract with a foreign company to purchase their products or services (since 2019). They represent 19.5% of the surveyed firms and are largely concentrated in the Tashkent region, among larger firms (> 20 workers) and firms in the retail sector.
34
Figure 15 : Reported strength of young workers (% firms)
Source: World Bank (2021).
Note: See methodology in Annex 2. Firms reported up to three strengths they perceived among young candidates
(whether they employ youth or not). See Annex 2 or footnote 143 for the sectors definitions.
Job search channels for youth and employers
Informal channels (interpersonal relations and social ties) are the most used channel by firms to recruit
workers. Employers mostly rely on informal channels backed by credibility signals rather than openly
search for candidates. The use of acquaintances and personal networks remains the top channel to find
job candidates: 66.5 percent of firms report using it. Other channels for recruitment are not used by more
than a third of firms (Figure 16). This is a constant trait across all types of firms, and the proportion is even
as high as 76 percent among internationally oriented firms and 75 percent among firms which experienced
positive growth. The low use of formal channels (e.g., online, social media, or paper postings which are
publicly available) penalizes those who are not well connected, especially youth (among all jobseekers)
and even more those from poorer families.
While informal channels dominate across all types of firms, the use of other recruitment methods varies
depending on the size of the firm and across regions and sectors. Beyond informal channels, small firms
53%
50%
23%
16%
15%
10%
4%
3%
57%
59%
26%
13%
7%
9%
2%
2%
52%
41%
25%
20%
11%
14%
8%
4%
52%
49%
20%
16%
22%
9%
3%
3%
0% 10% 20% 30% 40% 50% 60% 70%
Motivation
Learning desire
Adapt easily to work conditions
Knowledge of computer and office equipment
Quality of the education received, updatedknowledge
Know what they want (working conditions, wage)
Probity
Difficult to answer
All Manufacturing and Construction Retail Other services
35
report low uses of other recruitment channels, especially compared with larger firms (Figure 16).82 The
difference is particularly large when it comes to using education institutions to recruit (larger firms using
them twice as much) or the use of social networks and paper postings. In Tashkent region, a far higher
share of firms rely on posting vacancies online on job portals (more than half of the firms, while this is less
than 20 percent of firms in other regions) or the use of social media to a smaller extent (Figure 16). Relying
on private recruitment agencies83 is also more prevalent in Tashkent (on average four times more firms
report their use in the Tashkent region). Conversely, a higher proportion of firms in regions other than
Tashkent rely on public Employment Support Centers under MELR to recruit (39 percent of regional firms,
more than twice than in the Tashkent region) or on education institutions to find new hires (35 percent
of firms, while only 23 percent of them in Tashkent region). Manufacturing and construction firms rely
more on ESCs (40 percent of them) than firms in retail which report a very low use (only 11 percent of
firms). Firms in the other services sector tend to rely on social networks (telegram and Facebook mostly),
job fairs, and private recruitment agencies; and they report poaching from other firms more frequently
than firms in other sectors (Figure 17).
82 Small firms correspond to firms with less than 20 employees. In Uzbekistan, they are sometimes referred as micro firms, although it includes firms with more than five employees and traditionally micro firms are defined as having up to five employees. Small firms represent 85% of the firms (weighted average – they are 47% of the sample). Larger firms correspond to firms with 20 or more employees. In Uzbekistan, this corresponds to the categories of “small firms” (20 to 49 employees) and “large firms” (50+ employees). Uzbekistan does not have an official “medium firms” category. Larger firms represent 15% of the firms (weighted average – they are 53% of the sample), out of which large firms are 3% (weighted average – they are 8% of our sample) (World Bank 2021). 83 Private employment agencies were established by Law of the Republic of Uzbekistan: “On private employment agencies”, October 16, 2018, No. ZRU‐501.
36
Figure 16 : Recruitment channels used by employers, size of firms, and region (% firms reporting using this
channel)
Source: World Bank (2021).
Note: See methodology in Annex 2. Other regions include Bukhara, Kashkadarya, Khorezm, Samarkand, and
Ferghana. See footnote 82 for firm size definitions. Percentage of firms reporting for each channel whether they use
it for their recruitments.
67%
34%32% 30% 29%
20% 19%
11% 10%
75%
54%
39%
23%
16%
22%
23%
14% 17%
60%
19%
26%
35%39%
18%
16%
8%4%
66%
32% 29%
26% 27%
17%16%
8%8%
68%
44% 45%
49%
37%34%
30%
22%20%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Acquaintances,friends, personal
contacts,someone's
recommendations
Online postings inJob platforms (e.g.
OLX)
Social networks(e.g. Telegram,Facebook,LinkedIn)
Colleges,universities, other
educationalfacilities
PublicEmploymentCenters (ESC)
Paper postings innewspapers orbillboards
Vacancies (Job)fairs
Poaching fromother enterprises
PrivateRecruitmentAgencies
All Tashkent region Other regions Small firms (<20) Larger firms (>=20)
37
Figure 17 : Recruitment channels used by employers by sector (% firms reporting using this channel)
Source: World Bank (2021).
Note: See methodology in Annex 2. See Annex 2 or footnote 143 for the sectors definitions. Percentage of firms
reporting for each channel whether they use it for their recruitments.
Personal networks are also the main job search channel used by youth. Youth, on their side, are aware
of that and search mostly through their personal network (relatives, acquaintances, friends). The
predominance of personal networks as the main source of information is explained by the strong family
ties and interpersonal relations among Uzbek people as well as by the limited number of good vacancies,
hence the high value placed to them. The next job search methods most used by youth are online methods
(job portals such as OLX, telegram channels, and bots) and actively directly contacting employers. Youth
find online search to be quite effective but recognize that telegram channels and bots are unreliable.
However, in rural areas, online methods are much less used because vacancies in rural areas are hardly
posted on such channels. This finding is consistent with firms reporting using less frequently job portals
and social media in regions outside Tashkent (Figure 16). Youth report that direct contact with employers
is very ineffective but is used as last resort, especially when there is a lack of vacancies.
The strong role of personal network in job search limits social mobility. Youth report that employers
more often favor “their own” candidates for an existing vacancy rather than best performing candidates.
Of course, this social factor of the labor market limits the employment opportunities of young jobseekers
from poor families, whose social ties, as a rule, rarely connect them with decision‐makers. Thus, youth
from poor families have fewer job opportunities and illusory chances to break the chain of social factors
that determine the state of poverty.
The second recruitment channel used by employers are online job portals, used by a third of surveyed
employers and mostly in the Tashkent region. As highlighted above, online private job portals are most
used by firms in the Tashkent region (Figure 16), and slightly more used by firms in other services sectors
67%
34% 32%30%
29%
20% 19%11%
10%
75%
32% 31% 30%
41%
21%
15%8%
4%
64%
32%23%
27%
11% 12%17%
6%10%
59%
38% 39%
32%28%
23% 24%
17% 15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Acquaintances,friends, personal
contacts,someone's
recommendations
Online postings inJob platforms(e.g. OLX)
Social networks(e.g. Telegram,Facebook,LinkedIn)
Colleges,universities, other
educationalfacilities
PublicEmploymentCenters (ESC)
Paper postings innewspapers orbillboards
Vacancies (Job)fairs
Poaching fromother enterprises
PrivateRecruitmentAgencies
All Manufacturing and Construction Retail Other services
38
(Figure 17). The main private job portals include Olx.uz, Rabota.uz, Headhunters, and Uzjobs (which
mostly gather vacancies for the area of Tashkent City). There is also a public portal which is the official
online database of vacancies in Uzbekistan, ish.mehnat.uz, managed by MELR and primarily created for
unemployed registered with Employment Support Centers which cover vacancies in the whole country.
Public and private (registered) firms are obliged to share their vacancies with the Unified National Labor
System (UNLS), which later posts their vacancies in ish.mehnat.uz:84 by law managers are fined for not
posting available vacancies. Private job portals are more user‐friendly for both firms and jobseekers in
terms of registration process and also because jobseekers can be directly contacted by firms.85 Youth consider private online job portals to be the most effective channels for job search. The site olx.uz is the
biggest private job portal; it is popular among youth as the site is constantly updates, is very easy to
register, and is also easier to contact employers than in all other job portals (both for qualified and non‐
qualified workers for short‐ and long‐term employment). Anecdotal discussions with firms suggest low
awareness of ish.mehnat.uz as a way to recruit candidates.
The public (and main) vacancy portal is not known or used by youth. Among young in the focus group
discussions, with the exception of 2‐3 people, nobody knew about ish.mehnat.uz. According to
interviewed experts, the website is not popular because it mainly publishes vacancies for low‐paid jobs
requiring low skills, very few vacancies for jobs in rural areas, and vacancies for specialized jobs requiring
tertiary education (e.g., doctors, lawyers, and agronomists who do not need job search assistance portals
because they are in demand with practically no unemployment). Registration is complicated, and it
requires provision of all personal information, including taxpayer number. According to the experts
surveyed, another limitation of the portal is that firms do not timely update the information on the
vacancies; hence, many vacancies in ish.mehnat.uz are in fact already filled.
Firms have limited interaction with educational institutions for their recruitment. Although vocational
colleges have mandatory agreements with employers and local authorities, the interaction is limited not
just for recruitment purposes but also with respect to the design and content of skills development,
curriculum revisions, and practical training. Only 30 percent of firms report recruiting through colleges,
universities, and other educational institutions. Partnerships with educational institutions and strong ties
between educational institutions and the private sector are a way to promote youth employment. Those
ties seem weak from the firm perspective.
84 In 2020, before the pandemic, the website had more than 34,000 postings. As of June 3, 2021, it had recorded 33,980 online postings (posted between May 5 and June 3). 85 An improved version of the job portal (ish2.mehnat.uz) is currently being developed by MELR, which will offer new features including submission of CVs for applicants who self‐register and the possibility to review CVs and applications online for employers.
39
5. Youth at work: What can be improved?
Where do we find youth at work?
Only one in three firms has at least one young worker and youth represent 12 percent of the total
production workforce in Uzbekistan. At the time of the survey (January‐February 2021), only 29 percent
of Uzbek firms report employing at least one young person. Youth represent 12 percent of the production
workforce.86 In comparison, female workers are found in 69 percent of firms but underrepresented in the
workforce (see Box 5). Among firms with young employees, the average number of young workers is 3.9
youth per firm. However, this hides the fact that most firms have few young workers: in fact, 45 percent
have only one young worker.87 As shown in Figure 18, youth are better represented in internationally
oriented firms (18 percent of their workforce) and in larger firms (17 percent of their workforce). In
comparison, Figure 19 shows how the young workers are distributed across firms (in aggregate). Firms in
the Tashkent region and firms in the other services industries are where we find two‐thirds of young
workers. Smaller firms (with less than 20 employees) account for the same share of young workers as
larger firms (with more than 20 employees), which is due to the large number of small firms in the
economy (represent 85 percent of firms). Female‐managed firms employ youth more frequently than
male‐managed firms (Box 6). Finally, youth are mostly employed in engineering, technician, or other
professional occupations as opposed to managerial or administrative positions. This is not surprising given
the level of work experience expected for youth.
86 For the production workforce, we consider workers reported by firms across types of occupations (managers, technicians, office clerks). Youth are 42% of the production workforce among firms with young workers compared with 12% across all firms. 87 The distribution of the youth workforce is right‐skewed, with main mass around small numbers of young workers per firms. In fact, among firms with young employees, 45% have only one young worker; 19% have two young workers, 11% have three workers, and the remaining 25% have more than three young workers.
40
Figure 18: Share of young workers in the workforce, by type of firm, size, region, and sector (% firms)
Source: World Bank (2021).
Note: See methodology in Annex 2. Other regions include: Bukhara, Kashkadarya, Khorezm, Samarkand, and
Ferghana. See Annex 2 or footnote 143 for the sectors definitions. See footnote 82 for firm size definitions.
12%
14%
11%
18%
11%
14%
11% 11%
17%
12%
9%
14%
0%
5%
10%
15%
20%
41
Figure 19 : Distribution of the youth workforce across regions, size of firms, and sectors
A. Across regions B. Across size of firms C. Across sectors
Source: World Bank (2021).
Note: See methodology in Annex 2. See Annex 2 or footnote 143 for the sectors definitions. See footnote 82 for firm size
definitions.
65%
35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Other regions
Tashkentregion
51%
49%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Larger firms (>=20)
Small firms (<20)
24%
15%
61%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Other services
Retail
Manufacturing andConstruction
42
Box 5 : Women at work
Women are underrepresented in the total workforce. A third of firms – mostly small firms – employ only men,
meaning women are not part of their workforce (permanent or temporary). Women represent around 33% of the
total workforce (accounting for both permanent and temporary workers), and 32% of the permanent workforce.88
When restricting to the production workforce only (managers, professionals, and clerks), the share of women
decreases to 25%. The share of female workers is higher in the service sector (39% of firms’ workforce) and in large
firms with more than 50 workers (48%), though still less than half of the workforce (Figure 20).
Figure 20 : Women in firms' workforce (share of workers and total number)
Source: World Bank (2021).
Note: See methodology in Annex 2. Other regions include: Bukhara, Kashkadarya, Khorezm, Samarkand, and Ferghana. See Annex
2 or footnote 143 for the sectors definitions. See footnote 82 for firm size definitions.
The gender of firm managers substantially affects the share of women in the workforce. The presence of women
in the management team seems to impact the presence of other female workers in the firm: firms with female
managers employ significantly higher numbers of women (13 per firm on average, compared with 2.5 on average in
male‐managed firms) and are associated with the highest share of women in their workforce (59%), compared to
25% percent in firms managed by men (Figure 20).
Most women are employed in permanent positions. Most female workers (87%) have a permanent contract. This
rate is as high as 92% among firms with positive growth and 93% among larger firms with more than 20 workers.
88 This is in line with 2019 Enterprise Survey which reports that 35% of the full‐time workers are female.
33% 26% 34% 59% 25% 33% 33% 32% 38% 26% 30% 39%
5
8
4
13
3
6 5
2
20
5
2
7
‐
5
10
15
20
25
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
share of men in workforce share of women in workforce (overall workforce) average nb female workers
43
This is mostly driven by medium size firms (21‐50 workers) rather than large firms with more than 50 workers where
temporary contracts are more common (15% of female workers)
Women are more likely to work as office clerks and are less represented among managers and professionals than
men. Most women are employed as office clerks (on average 43% of office clerks positions are women). Only 23%
of professionals, technicians or specialists are women and 17 percent of managerial workers are women (Figure
21).89 A higher share of female managers is found among firms with positive growth prospects and firms in the
Tashkent region. Firms that are managed by women have higher shares of female workers overall, including in
professional positions. Women are more likely to be in professional occupations in firms operating in other services
and Tashkent.
Figure 21 : Share of women in the workforce by occupation (%)
Source: World Bank (2021).
Note: See methodology in Annex 2. Other regions include: Bukhara, Kashkadarya, Khorezm, Samarkand, and Ferghana. See Annex
2 or footnote 143 for the sectors definitions. See footnote 82 for firm size definitions. We report the average share of women in
firms’ workforce for a given occupation.
89 Twenty‐four percent of firms report having at least one woman among the managers of the firm. In comparison, the 2019 Enterprise Survey reported 12% of firms with a female top manager (which is a more restrictive definition than “manager” in the firm).
17% 19%14%
73%
0%
21%
14%17% 19%
13% 12%
24%23% 23% 21%
33%
19%22% 24% 21%
28%
13%16%
35%
43%47%
37%
52%
39%
46%40%
43%40% 43% 42% 43%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Share of women in management positions
Share of women in professionals / engineers / technician positions
Share of women in office clerks positions
44
Box 6 : Are firms with women in management positions different from others?
Firms with women in the management tend to be larger and distributed across specific sectors. One in four firms
have at least one woman among their managers and executives. Female managers are more common in larger firms.
90 Half of firms with female management are concentrated in three sectors: wholesale and retail, management, and
support (and other) services and health and social services. Compared with firms with exclusively males in the
management, there are significantly more firms with female management in education and health and social
services. Female‐managed firms tend to have a larger workforce (24 workers on average versus 9 in firms with male
management). They exhibit a higher share of women in engineer, technician, or professional positions (33% of their
workforce, compared with 19% in male‐managed firms) and in administrative clerk positions (52% of their workforce
versus 39% in male‐managed firms).
Female‐managed firms employ youth more frequently than male‐managed firms and differ on recruitment
channels. 40% of female‐managed firms employ at least one youth versus 25% in non‐female managed firms, the
share of youth in their workforce do not differ much. Firms with women in their management report higher use of
job fairs and of private recruitment agencies for their recruitments (respectively 15% and 27% of firms with female
management which is close to twice as much as for male‐managed firms). Conversely, they rely less on informal
networks and acquaintances (only 56% of firms with female management report using this channel, compared with
70% of male managed firms).
Firms with women in managerial positions perform better (based on subjective assessment). More women‐led
firms report having had positive growth compared to the previous year (26% of firms versus 18% in firms without
women in the management). Female‐managed firms also report a 65% (self‐reported) increase in revenues, which
is double that reported by firms with male. Regardless of the gender of management, firms report on average similar
constraints to firm growth, with the exception of the general education level of workers, which seems more binding
among female‐managed firms (reported by 40% of firms compared with 30% in).
Turnover of youth
Firms report firing youth mostly for economic reasons but also because of their behavior.91 The main
reason for firms to lay off youth is “economic reasons” (i.e., reduction of the workforce due to a decrease
in revenues; 37 percent of firms which fired youth, Figure 22). This is likely to be a consequence of the
pandemic and related lockdowns, happening in the same period of time. Behavior and unsatisfactory
attitudes toward senior staff are reported by firms as the second reason for dismissal of young workers,
which reflects weaknesses in terms of socioemotional skills (28 percent).92 This echoes the findings of
another employer survey led by a consulting firm in 2020 which reports that 23 percent of firms dismissed
90 Thirty‐six percent of large firms have women in management positions versus 21% in small firms. For small firms, management positions are likely to be the owner (which would mean the owner is a woman); for larger firms, the management team is larger. Therefore, it is possible to have a few women‐owned firms in both categories, but more women in management in larger firms for reasons of size. 91 On average, 0.5 youth have been fired per firm since the pandemic among firms with young workers in the pre‐pandemic workforce. 92 Given the timing of the survey, it is difficult to assess how much behavioral reasons would explain layoffs in the absence of the pandemic context (i.e., would they prevail over economic reasons or not?). While the number of observations is small when looking at disaggregated categories, we notice that behavioral reasons (unsatisfactory relations with more senior staff) are reported as the top reason for dismissals among firms with positive growth.
45
workers (of all age) for disciplinary violations (second reason for turnover after unsatisfactory level of
skills).93 It is interesting to note that lack of skills is a binding constraint to hire but is not reported to affect
the decision to fire young workers.
Figure 22: Reasons for dismissal of young workers (% firms with young workers)
Source: World Bank (2021).
Note: See methodology in Annex 2. Percentage of firms reporting having dismissed a young worker since January
2020, for the stated reason. Multiple answers were allowed (up to three reasons).
Behaviors and unsatisfactory attitudes toward senior staff are reported by most firms as reasons for
dismissal. While it is difficult to abstract from the pandemic context, looking at firms with good growth
perspective can tell us a bit more about the main reasons for youth dismissals outside of the difficult
economic context. For such firms, the prevalent reason for dismissal relates to difficult relationships
between employed youth and more senior people (34.3 percent), which reflects weaknesses in terms of
socioemotional skills as well as lack of technical skills (28.3 percent). For those same types of firm, a slightly
higher turnover of youth quitting is observed, and explained by higher likelihood of poaching from other
firms (28 percent of firms reporting it). Youth with experience in firms with positive growth seem to be
more attractive to other firms, but this could a combination from the quality of on‐the‐job training
received in those firms (as perceived by competitors) or by an initial competitive selection into those firms.
More importantly, in such firms, the level of wages is not a main reason for turnover. This may mean that
some youth quit because significant skills were not accumulated in their firm. Again, this is a signal of the
importance of training.
The main reasons for the turnover of young workers relate to poaching by other firms and family. In the
same period since January 2020, 15 percent of firms report youth quit (this is 31 percent of firms
conditional on having at least one young worker since January 2019).94 The top three reasons for this
turnover are being other firms poaching youth (21 percent), low level of offered wages (19 percent), and
93 DaVinci Management Consulting (2020). 94 On average 1.2 youth (per firm) left by themselves across all firms with youth in their pre‐pandemic workforce, which is 2.5 more than dismissals
37%
28%
17%
14%
12%
Firing for economic reasons
Unsatisfactory relations with managers, senioremployees
Lack of flexibility on work hours
Lack of technical skills
The employment contract is over
46
family reasons such as wedding, maternity, and family care (17 percent).95 The pandemic could have
disproportionally impacted the decision to leave for family. Note that 9 percent of firms report that youth
are leaving firms to migrate abroad.
Skills gaps and shortages among young workers
Once the candidates are recruited, employers are generally satisfied about their young workers. Two
out of three firms report being completely satisfied with their young employees. This is relatively
homogeneous across types of firms. However, most firms do identify weaknesses in terms of soft and
technical skills.
Digital and knowledge of foreign languages are the main skills gaps identified by employers in young
workers. Around two‐thirds of firms complain about the lack of technical and soft skills among their young
employees. The main skills gaps identified by employers relate to skills that are likely to be increasingly
relevant in the future of work and which should be built during years of schooling, notably: computer skills
(29 percent of firms reporting this as a weakness) and knowledge of foreign languages (27 percent of
firms) (Figure 23). In fact, this echoes the previous finding that only a small share of firms reports computer
skills among youth strengths (16 percent on average, Figure 15). Those are two areas in which one would
expect the younger cohort of workers to be better trained than the older ones, and which are key for the
firms’ growth in the modern economy. In fact, according to another employer survey, knowledge of new
technologies is the first skill employers look for (MELR 2019). The lack of fluency in a foreign language is
especially highlighted among larger firms (42 percent of them), among internationally oriented firms (32
percent) and firms in the retail industry (36 percent). This is less binding for small firms or firms in the
manufacturing sector (19 percent of firms).96 The lack of technical skills working with equipment and
machinery is reported by 18 percent of firms, mostly in the manufacturing and construction sectors as
well as among internationally oriented firms. Lack of foundational skills (literacy in Uzbek and numeracy)
is reported by only a tenth of firms, with higher levels of constraints for firms in Tashkent.
95 In firms having at least one young worker. 96 Although a slightly higher proportion of firms in the retail sector report a shortage of computer skills, the difference with the other sectors is not statistically significant (given our sample size). Similarly, the shortages of computer skills are not statistically different across regions and firm size.
47
Figure 23 : Technical skills lacking among young workers, by firm type and sector (% firms reporting the
skill is lacking)
Source: World Bank (2021).
Note: See methodology in Annex 2. See Annex 2 or footnote 143 for the sectors definitions. Percentage of firms
reporting that the skill is lacking among young workers in the firm (multiple answers allowed, up to three).
Lack of appropriate behavior and lack of initiative are the main soft skills youth have to develop.
Regarding soft skills, lack of initiative (27 percent of firms) and behavioral issues such as discipline or
diligence (22 percent of firms) are the two main weaknesses identified, followed by the lack of goal setting
(16 percent of firms) (Figure 24). Conversely, few firms report teamwork or communication skills gaps.
Larger firms, firms in Tashkent region, and internationally oriented firms report quite consistently higher
levels of constraints on all soft skills compared with other firms. Differences across sectors are not
significant with the exception of firms in manufacturing and construction which complain of young
workers’ lack of initiative, goal setting,97 and autonomy.98 Initiatives and goal setting are skills that can be
typically trained in educational projects or extra‐curricular activities, before joining the labor market. The
lack of discipline especially constrains firms in Tashkent region (compared with other regions) and
internationally oriented firms.99 Behavioral issues may reflect discrepancies between youth perception of
the workplace and reality. Opportunities to experience the workplace during studies may increase youth
readiness to enter firms with the appropriate behavior.
97 22% of firms in this sector, less than 15% of firms in others. 98 15% of firms in this sector, at least the double than in other sectors. 99 Across sectors, the shortage of behavioral skills among firms is quite homogeneous.
29%27%
18%
9%6%
27%
32%
28%
16%
8%
29%
19%
33%
8%6%
33%36%
10%11%
8%
27% 28%
10% 9%
6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Computer skills :writing documents,working with internet
Knowledge of foreignlanguages (Russian,English, Korean)
Practical skills insetting up and
managing equipmentand machinery
Literacy in Uzbek /State language (abilityto read and write)
Numeracy
All Internationally oriented firms Manufacturing and Construction Retail Other services
48
Figure 24: Soft skills lacking among young workers (% firms reporting the skill is lacking)
Source: World Bank (2021).
Note: See methodology in Annex 2. Other regions include: Bukhara, Kashkadarya, Khorezm, Samarkand, and
Ferghana. Percentage of firms reporting that the skill is lacking among young workers in the firm (multiple answers
allowed, up to three).
Few firms provide similar training for youth and older workers. Firm‐led training can compensate for
inadequate skills of candidates, although this is expensive for the firm and firms have less incentives to do
so if the risk of poaching from other firms is high. Only a third of interviewed firms report providing training
to employees, including informal training (Figure 25). When considering only formal training, it declines
to 15 percent of firms (which is comparable to Enterprise Survey data of 17 percent).100 Youth do not seem
to receive more (or less) training than older workers: only 37 percent of firms with young workers report
providing training to their young workforce (33 percent of firms for any type of worker).101
The firms more likely to provide training to workers (and young workers) are larger, internationally
oriented firms and firms operating in the service sector. 58 percent of larger firms provide training to
workers, which is twice the share of small firms (Figure 25). Half of internationally oriented firms also
provide training to workers. Firms in the other services industry are also more likely to train their
workforce compared with retail or manufacturing and construction (16.5 percent of firms in the services
100 Enterprise Surveys (World Bank 2019b). Note: Formal training in our survey includes all forms of training except on‐the‐job training and internal training by firm’s staff. Conditional on providing any type of training to workers, formal training is provided by 46% of firms. 101 The 37% rate is conditional on having young workers in the firm. Note that firms training young employees represent only 12% of all the firms of our survey (unconditional rate).
27%
22%
16%
11%10%
8%
5% 5%
29%28%
20%
12% 11% 10%
1%2%
40%
35%
17%
12%11% 11%
5%4%
18%
14%16%
10%8%
6% 5%6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Lack ofinitiative
Lack ofdiscipline,
diligence, andbehavioralissues
Lack of goalsettings
Lack ofplanning skills
Lack ofautonomy
Performanceissue
Not good atteamwork
Lack ofcommunication
skills
All Internationally oriented firms Tashkent city Other regions
49
sector compared with less than 9 percent in the other industries, Figure 25). The same type of firms
(larger, internationally oriented and in the other services sector) is also more likely to provide training to
young workers. In addition, firms in Tashkent region are more likely to provide training to youth than in
other regions, and also more likely than for their general workforce. Firms with female‐management also
disproportionately train its youth workforce compared with male‐managed firms and compared with its
workforce of all ages (Figure 25 and Box 6).
Figure 25 : Training provided to all workers in general, and to young workers (% firms reporting providing
training)
Source: World Bank (2021).
Note: See methodology in Annex 2. Other regions include: Bukhara, Kashkadarya, Khorezm, Samarkand, and
Ferghana. See Annex 2 or footnote 143 for the sectors definitions. See footnote 82 for firm size definitions. Percentage
of firms reporting the provision of training to any worker among all firms (respectively to any worker under age 30
among firms with a youth workforce) since January 2019.
Informal on‐the‐job training is by far the most common type of training provided. Workforce training is
mostly informal on‐the‐job training by more experienced workers who serve as mentors (54 percent of
firms reporting training, Figure 26). This proportion is even higher among manufacturing and construction
firms (Figure 26). Formal internal training reported by firms mostly correspond to training by their own
dedicated trainers (32 percent of firms), and this is especially high in Tashkent (39 percent of firms) (Figure
26). Less than 20 percent of firms resort to external training (Figure 26). Larger firms are slightly more
likely to send their workforce to train in public institutions (25 percent of them, Figure 26). Firms in the
retail industry, and to a lesser extent internationally oriented firms, are more likely to resort to external
private training institutions (27 percent of retail firms, Figure 26). Only 15 percent of firms report sending
their workers to public institutions for training. Very few firms resort to sending their workers abroad for
training.
33%
49%
35% 30% 36%29%
58%
32%27%
38%37%
50% 50%
42%
34%31%
54%
30% 30%
45%
0%
10%
20%
30%
40%
50%
60%
70%
Training provided to any worker Training provided to young workers (among firms with youth workforce)
50
Figure 26: Type of training (formal and informal) provided by firms to workers (all workers) (% firms)
Source: World Bank (2021).
Note: See methodology in Annex 2. See Annex 2 or footnote 143 for the sectors definitions. Percentage of firms
reporting providing this type of training, conditional on having provided training to any worker since January 2019.
Multiple answers were allowed, without limit.
As for young workers, training is again mostly internal in the form of informal on‐the‐job training among
the 37 percent firms providing training to their young workforce. Almost all firms who train young
workers do so through internal training rather than external training. Internal training takes mostly the
form of informal on‐the‐job training, usually required to integrate new hires to the workforce: among
firms providing internal training to their young workforce, 79 percent provide on‐the‐job training through
mentors. Informal on‐the‐job training is even higher in the manufacturing and construction sector (90
percent of firms). Only 19 percent of firms report providing internal training to youth on computer‐related
skills, while earlier we saw they were not a strength in the young workforce.
Among firms providing training to youth, one out of three send young workers to external training
providers, mostly to public training centers. Forty‐one percent of firms providing training to their young
workforce report providing external training in public technical or vocational centers, while 31 percent of
firms rely on private training providers and 10 percent send their young workers abroad. Firms using public
training centers are mostly larger firms, firms in Tashkent region, and firms in the other services industry
(around 50 percent of firms for each type). Manufacturing and construction firms rely mostly on private
providers (83 percent of firms in this sector), firms in the retail industry rather use private training
institutions (72 percent of firms) and firms in other services reply on public training providers. Those who
do not provide external training to youth consider there is no need for that and favor the option of training
them at the firm’s premises with their own internal resources. Internal training is likely to be less costly
for firms, however the question of the quality of such training (especially when relying on employees who
are not dedicated trainers) remains.
54%
32%
8%
19%15%
1%
45%
30%
8%
22%
15%1%
65%
34%
8%
19%
9%
0%
49%
29%
5%
27%
17%
1%
51%
32%
10%15%
18%
1%0%
10%
20%
30%
40%
50%
60%
70%
On‐the‐job trainingthrough mentors
Internal training : firm’s staff dedicated to training
Internal training :external
consultants /private training
companies on firmpremises
External training :private providers
External training :public providers
External training :Sending workersabroad for training
All Internationally oriented firms Manufacturing and Construction Retail Other services
51
6. COVID‐19 pandemic impacts on the workforce
The pandemic impacted both recruitments and dismissals. About one in three firms report having hired
at least one person since the pandemic crisis hit, while more than half (56 percent) have tried to recruit
before the pandemic (since January 2019). Since the start of the pandemic, 35 percent of firms have
dismissed at least one worker (of any age).102 This is much higher than what firms reported in June 2020
according to the UNDP SME survey (when only 2 percent of firms reported dismissals based on last month
recall data) but compares with the 12 percent dismissals reported by firms between August and
September 2020 in the World Bank Business Pulse survey.103 It is possible that a year after the start of the
pandemic and government support measures, firms are less likely to underreport dismissals.
The share of firms employing at least one youth has significantly dropped since the start of the
pandemic. While 48 percent of firms report employing at least one youth before the pandemic (as of
January 2020), only 29 percent of firms report having a young worker in January‐February 2021 (i.e., time
of survey). This is consistent with the distribution of young workers across firms, which shows most firms
have 1‐3 young employees. This 19 percentage points drop in the share of firms with at least one young
worker could point to the fact that young workers may have been the first to be laid off, reducing to zero
the number of young employees in firms.
In terms of total workforce, around one out of five workers has been fired since the pandemic started,
with higher layoffs in regions outside of Tashkent and in the manufacturing and construction sectors.
In aggregate, 17 percent of the pre‐pandemic workforce has been fired since March 2020, when the
pandemic started. A higher proportion of the workforce has been fired in firms outside of Tashkent (20
percent of the workforce) compared with Tashkent region (12 percent of the workforce). The
manufacturing and construction sector stands out with 27 percent of its workforce fired (nearly one out
of three workers) while this share is much smaller in other sectors. The workforce was affected by the
pandemic beyond dismissals, as firms which used other means to adjust to the pandemic crisis (Figure
27). Granting leave to workers has been the most commonly used margin of adjustment, consistent with
the findings of the UNDP survey on SMEs and World Bank COVID‐19 Business Pulse survey respectively
taking place in May/June and September 2020, around six months prior to our firm survey.104 Twenty‐six
percent of firms have granted paid leave to their employees, and around 20 percent of firms have granted
unpaid leave or reduced their work hours.105 Note that those measures may have been taken
subsequently by firms, some of them explaining in interviews that they granted leave to workers first, and
finally had to lay off some of them. Few firms (4 percent) reduced the salary of their workers.
102 Between January 2020 and February 2021 in World Bank (2021). 103 UNDP (2020) and World Bank (2020a). The difference is due to UNDP and WB Pulse Survey asked for dismissals in the last month while our survey asks for the cumulative dismissals since start of the pandemic. 104 World Bank (2020a). 105 The reported use of reduced working hours is much higher in World Bank (2021) than in the COVID‐19 Business Pulse Survey (World Bank 2020a). Differences in measurement suggest that reduced worked hours may have been much more used at the onset of the crisis (the Firm Survey on Youth Employment Constraints measuring since the start of the pandemic in March 2020 while the Business Pulse survey measures between August and September 2020).
52
Figure 27 : Share of workforce employment affected by COVID‐19 pandemic
Source: World Bank (2021).
Note: See methodology in Annex 2. See Annex 2 or footnote 143 for the sectors definitions. See footnote 82 for firm
size definitions. Computed as a percentage of the workforce since January 2020. Note that there is a slight time
mismatch as the numerator variable is measured since March 15, 2020, only (start of the lockdown). Categories are
not exclusive; a worker might have been granted paid leave followed by unpaid leave followed by a dismissal.
The pandemic disproportionately impacted recruitments rates in particular of small firms and firms in
the manufacturing and construction sectors. Larger firms were much less impacted in their recruitment
pace than small firms, as the share of small firms recruiting dropped from 55 to 32 percent (a 23
percentage point drop) before and after the pandemic started compared with a drop from 62 to 50
percent (a 12 percentage point drop) for larger firms (Figure 28). The manufacturing and construction
sectors also have experienced a large decrease in the number of firms recruiting (from 75 to 36 percent,
39 percentage point drop), compared to other service sectors (an 18 percentage point drop) and retail
(11 percentage point drop). Since the pandemic started, hiring firms are mostly internationally oriented
(44 percent of firms) compared to firms with no international exposure (33 percent) and (not surprisingly)
17%
15%
19%
14%12%
20%17%
11%
27%
14%11%
16%
16%17%
14%16% 17% 16%
18%
15% 13%
19%
26%
29%
23%23% 23%
28%
22%
45%
20%
30%
27%
19%18%
21% 21%
16%
21% 20%
12%
26%23%
12%
4% 5%4%
5%3%
5%4%
6%4% 4% 4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Fired Granted leave without pay Granted leave with pay
Reduced work hours Reduction in salary or benefits
53
firms experiencing higher growth (39 percent of firms) compared to firms with negative growth (29
percent).106 However, there are no notable differences across regions.
Figure 28 : Firms recruiting before and after the pandemic started (% of firms reporting to recruit at least
one person)
Source: World Bank (2021).
Note: See methodology in Annex 2. See Annex 2 or footnote 143 for the sectors definitions. See footnote 82 for firm
size definitions. For each category, the left bar corresponds to recruitments since January 2019 and the right bar to
recruitments since March 2020 (start of the pandemic).
Recruitment prospects for the coming months are not pessimistic. Generally, firms consider that the size
of their workforce will go back to normal within two months (about by April 2021). Close to two‐thirds of
firms expects that their permanent workforce will not increase but stay the same in the next six months
(which means by the summer 2021) while one‐third expect an increase. Very few expect a decrease. While
there is no difference related to the size of firms, firms in regions other than Tashkent as well as firms in
the manufacturing and construction sectors (hard hit by the pandemic) report slightly better prospects.
When looking at the number of people they expect to hire in the next six months, the volume of new hires
is twice as large among larger firms (13.4 new hires on average compared to seven in small firms) and
twice as large in the manufacturing and construction sectors (respectively 9.2 and 8.7 new hires on
average compared to 4.3 in retail). Internationally oriented firms report better prospects compared to
other firms, with 37 percent of internationally oriented firms expecting to hire to about 13 additional
employees.
106 Internationally oriented firms represent 19.5% of the firms surveyed (full sample) and 25% of hiring firms since the start of the pandemic. Firms with positive or stable growth represent 48% of the firms surveyed (full sample) and 57% of hiring firms (World Bank 2021).
56% 55% 57%
66%
54% 55%
62%
75%
52%46%
35%39%
29%
44%
33% 32%
50%
36% 34% 35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
54
7. The role of institutions to promote youth employment
The role of Public Employment Services
MELR is the responsible authority for active and passive labor market policies, with support from central
and local institutions. At the central level, MELR is responsible for providing overall policy direction,
oversight, and funding of administrative functions for all MELR units. A new government agency – the
Agency for Youth Affairs ‐ has been established in 2021. At the local level, the Employment Support
Centers (ESCs) – local MELR units present in each of the country’s 200 districts – implement employment
programs and services. The State Fund for Employment Promotion and Public Work Fund, managed at
MELR headquarters, finance most of the employment programs and work by ESCs, including
intermediation services, training, and public works. Outside of MELR, institutions contributing to the
implementation of ALMPs include the Ministry of Economy (microfinance programs, professional
training), Ministry of Higher and Secondary Education (professional training), state‐owned microfinance
institutions/ banks (implementation of concessionary microfinance programs), Hunarmand Craftsmen’
Association (identifying beneficiaries for master‐apprentice/on‐the‐job training, microloans for
craftsmen), and at the local level, mahallas and khokimiyats (identification of unemployed and ALMP
beneficiaries).107 The Youth Union is a non‐profit organization and has more than thirty non‐governmental
organizations.
Local ESCs are responsible for the implementation of public employment service, unemployment
benefits and active labor market programs (ALMPs). As May 2021, ESCs are responsible to register
jobseekers, profile them, communicate with employers and collect job vacancies; they perform counseling
service, job‐matching and job search assistance, organize job fairs, refer to the class‐based professional
training and re‐training delivered through the MELR colleges, KOICA centers and the job multi‐functional
centers, refer to two microloan programs and implement wage subsidy schemes for vulnerable
unemployed (a quota‐based employment scheme and an above‐quota based scheme), a training subsidy
to employers for new hires, a scheme to subsidize start‐up costs, and public works. None of the programs
have been evaluated and monitoring data is not easily available and accessible. All programs aim to
activate one or more “socially vulnerable” unemployed registered with the ESCs, defined as college recent
graduates, people with disabilities and people caring for disabled, former military servicemen, former
prisoners, victims of human trafficking and long term unemployed and unemployed individuals closer to
retirement age. ESCs also determine and pay training stipends and unemployment benefits.108
Some ESCs are gradually moving into the new regional “Job Multi‐Functional Centers” which serve as a
one stop shops for employment services, professional training and in some cases for migration services.
The first job multi‐functional center was launched in Tashkent in 2019 as a one stop shop to provide
different types of professional training, services promoting organized labor migration, employment
services and information. Inside each regional multifunctional center there is the ESC of the district where
the center is located. To date, regional job multi‐functional centers have been launched in the Republic of
107 World Bank (2019a). 108 Note that training subsidy and start‐up cost subsidy are for any job seeker / unemployed registered. But above and below quota indeed for socially vulnerable.
55
Karakalpakstan, Samarkand, Namangan, Ferghana, Kashkadarya, Surkhandarya and Khorezm. Other 8
centers are expected to be launched in the remaining regions by end of 2021.
Programs supporting youth employment
ALMPs are relatively new and lack an integrated policy approach and a strong monitoring and
evaluation system to inform policy decisions. With a limited private sector, the need for ALMPs was
limited up until 2017 when the government launched a broad set of market‐oriented reforms.
Concessional loans and a quota system to employ socially vulnerable jobseekers were the main active
measures. Since 2018, the menu of ALMPs expanded to include hiring subsidies for vulnerable employees
above the quota, training subsidies for new hires, apprenticeships, new vocational training courses at new
established training centers, public works,109 job search assistance and start up subsidies. To our
knowledge none of the ALMPs has been properly evaluated in terms of cost‐effectiveness and monitoring
data are not easily accessible.
In addition to ALMPs targeted to socially vulnerable groups (including youth), the following schemes
are specifically targeted to youth: (i) the provision of tax benefits for enterprises employing youth110; (ii)
support for youth entrepreneurship, including through the provision of loans at preferential rates through
state banks (“soft loans”) and business training courses; (iii) legal mechanisms to protect youth from
dismissal; (iv) provision of vocational training and retraining; and (v) apprenticeships. In 2018 the
government launched the “Youth is Our Future” program, to boost self‐employment and micro‐
entrepreneurship among youth by providing concessional loans. In 2020 the program received substantial
additional funds to provide loans.111
Nonetheless, evidence from program monitoring data show that youth are more difficult to place in
jobs than other unemployed individuals. Among the unemployed registered with the ESC (under MELR)
before the pandemic (2018), more than a third (39 percent, about 245,000 youth) are recent graduates
of secondary school, professional colleges, and universities, which is high compared to the youth share of
the working‐age population (22 percent).112 The vast majority of unemployed youth reside in rural areas
(77 percent). According to MELR monitoring data, successful job placement rates among recent graduates
are much lower than among other unemployed groups. For instance, on average two in five registered
unemployed find a job through ESC services and programs; whereas 1.4 in five recent graduates find a job
through ESC services and programs. Graduates from secondary general school and tertiary education face
lower placement rates than graduates from colleges and vocational institutions.113 However, it is difficult
109 Public works are mostly jobs for cleaning territories, caring for green spaces, harvesting crops, unskilled construction work. 110 Since May 2021, firms hiring young people under 25 years of age who have been working for at least six months can be fully refunded (starting from the seventh month) of the social tax paid for these young employees (President Decree No. UP‐6208). Besides, firms hiring unemployed youth included in the Youth Notebook are entitled to rental benefits when they rent state properties. 111 Republic of Uzbekistan (2020). 112 The share of the 16‐24 year old population over the share of the 16 year old and older population is 22 percent based on HBS 2017. 113 Based on MELR (2021), the successful placement rate is in 2018 is 22% for recent graduates from secondary and tertiary educational institutions and 33% for graduates from vocational colleges.
56
to further interpret differences across placement rates without information on refusal rates and
beneficiary reasons for refusing proposed jobs.
57
Table 2 : Coverage of employment programs and services
Source: MELR (2021). Notes: Youth are those between 16 and 30 years old.
(*) Includes training in labor legislation, culture and language of the destination country, occupational safety and health, prevention of AIDS and religious
extremism.
Women Youth Women Youth Women Youth Women Youth
Number of registered jobseekers 709,752 375,563 273,250 823,832 420,355 321,143 773,452 414,470 302,000 626,480 327,386 245,225
1/ Unemployment benefits 88,589 54,518 39,101 89,651 n/a n/a 57,874 n/a n/a 14,477 n/a n/a
2/ Employment subsidies (all types) 20,217 12,432 7,531 47,181 20,809 15,180 12,924 6,854 n/a ‐ ‐ ‐
Training subsidy for newly hired 1,330 794 510 4,481 2,963 2,124 3,900 2,632 n/a ‐ ‐ ‐
Start up subsidy 2,996 2,138 894 6,491 2,528 2,335 4,107 1,827 n/a ‐ ‐ ‐
Above quota wage subsidy 178 127 116 507 334 245 989 550 n/a ‐ ‐ ‐
Greenhouses subsidy 15,713 9,373 6,011 35,702 14,984 10,476 3,928 1,845 n/a ‐ ‐ ‐
3/ Vocational training (enrollment) 90,205 59,584 48,602 52,217 36,017 41,298 36,750 29,763 29,033 20,543 14,157 16,229
VTCs (including KOICA centers) 32,849 n/a n/a 15,500 n/a n/a n/a n/a n/a n/a n/a n/a
NGOs, public colleges, technicums 47,819 n/a n/a 18,640 n/a n/a n/a n/a n/a n/a n/a n/a
Apprenticeships 9,537 n/a n/a 18,077 n/a n/a 14,235 n/a n/a 8,559 n/a n/a
4/ Public Works (public + private sector) 177,286 108,939 57,852 521,000 278,439 175,449 263,230 115,723 52,796 355,869 n/a n/a
5/ Job search assistance 250,234 135,451 106,487 362,874 181,107 147,989 356,897 204,906 155,706 255,539 127,272 123,213
6/ Youth is Our Future n/a n/a n/a 10,025 n/a n/a 12,362 n/a n/a 20,034 n/a n/a
7/ Pre‐departure training for labor migrants* 31,738 123 16,757 10,272 39 2,342 4,392 237 1,915 3,541 319 1,719
8/ Other services for migrants (life and
health insurance, subsidied tickets, etc.) 14,988 n/a n/a 13,883 n/a n/a 288,906 59,596
All
beneficiaries
Out of which:
2021 (Jan ‐ Aug) 2020 2019
All
beneficiaries
Out of which: All
beneficiaries
Out of which: All
beneficiaries
Out of which:
2018
58
The coverage of active labor market programs is still very small albeit increasing in the past years.
Overall, about 12 percent of the registered jobseekers received employment support programs (including
different forms of employment subsidies, vocational training, apprenticeships and Youth is our Future
program)) and about 521,000 public works were subsidized in 2020 (Table 2). This represents a substantial
expansion compared to the ALMP coverage in 2018, though it is still small compared to the demand for
employment services. In 2020, the coverage of employment programs among youth was about 18 percent
and among female jobseekers was 14 percent (Table 2). Specifically, 6 percent (47,181) of the total
registered jobseekers benefited from employment subsidies in the form of either wage subsidies for
socially vulnerable jobseekers above the established quota, or greenhouse activities (high demand), or
start‐up costs for business registration and insurance costs (also targeted to returning migrants) or in the
form of training subsidies for employers to incentivize training of new hires. Another 6 percent (52,217)
enrolled in vocational training which includes trainees of Vocational Training Centers (VTCs), public
colleges, vocational training conducted in partnership with NGOs and apprenticeships). Public works are
equally available to men and women, though only a third (175,449) of public works are assigned to youth.
In 2020, 362,874 jobseekers (44 percent of total jobseekers) received job search assistance and job
matching services according to MELR data.
The scale of training and retraining courses for the unemployed is expanding though curricula are not
fully responsive to labor market needs. The class‐based vocational training system for the unemployed
currently includes 16 "Ishga Markhamat" monocenters specializing in providing services to the
unemployed, 30 VTCs and 136 places for vocational training of the population in the makhallas. Very
recently, 28 additional VTCs are being equipped to provide short‐term training courses.114 The number of
unemployed who have undergone training courses referred by the Employment Support Centers was 6
percent of registered jobseekers (about 52,000 individuals) in 2020 and doubled to 12 percent in 2021 as
per latest MELR data (Table 2).Table 2115 Youth represented the vast majority (80 percent) of those who
enrolled in vocational training in 2020, though the share of young beneficiaries of training courses
dropped to 54 percent in 2021 possibly due to the job losses and need for re‐training among older
workers.116 Other vocational training initiatives are implemented in regions affected by high youth
unemployment rates. For example, MELR jointly with UNDP is implementing a program to improve the
population skills in Ferghana Valley. The Agency for Youth Affairs and the Ministry for Support of the
Mahalla and the Family have also ongoing initiative in partnership with local NGOs. All these projects are
expected to increase the scale and effectiveness of vocational training provision for the unemployed.
Nonetheless, officials of ESCs interviewed as part of the study recognize that training and retraining
courses for the unemployed are not conducted regularly and are not responsive to labor demand. The
selection of training courses provided do not respond to the professional skills required by occupations in
demand, rather to the capacity of the providers and availability of teachers.
114 Resolution of the President No. PP‐5140 "On measures to further improve the system of vocational training", dated June 8, 2021. 115 In particular, about 50 percent were trained in industry and services, 27.6 percent in construction, 3.7 percent in agricultural technology, and 6.8 percent in IT skills were trained through apprenticeships (MELR). 116 About 30 former professional colleges were transferred to MELR and training centers for professional training and retraining of unemployed youth are planned to be created on their basis. A new KOICA Vocational Training Center (created with the assistance of the South Korean agency) is currently ongoing in Fergana city. In addition, in partnership with local NGOs, KOICA is supporting training courses in sewing techniques and cooking in Jizzakh region.
59
The apprenticeship program in the craft sector is effective in terms of job placement though one of the
smallest programs. The program is designed to support young unemployed interested in pursuing careers
in one of 34 professions MELR defines as a “craft,” such as woodwork, jewelry‐making, and carpet
weaving. It was launched in 2018 to promote the tourism industry. The program matches apprentice‐
master pairs and funds on‐the‐job training in the form of a 2–3‐month apprenticeship117 and served about
18,077 individuals in 2020 growing from 8,559 in 2018 (Table 2)). According to interviews with ESCs, about
80 percent of the master craftsmen retain their apprentices after the three months. However, the
program’s scalability is uncertain, as ESCs find it challenging to match apprentices to masters even at the
current modest scale.
Programs supporting youth entrepreneurship have been traditionally almost exclusively based on
concessional microloans, though they are more recently tailored to address skill barriers of potential
young entrepreneurs. In Uzbekistan, there is limited distinction between different forms of
entrepreneurship (i.e., subsistence, own account, productive microenterprises, SMEs) and therefore no
tailored approach to appropriately suit each one’s specific needs. Concessional microloans (under
subsidized lending programs) have been used as the main policy instrument to promote entrepreneurship
for long time. Lack of finance is not the only constraint, and skills and entrepreneurial mindset are
increasingly found to positively impact the success of entrepreneurship programs.118 Only recently
entrepreneurship skills have been mainstreamed in vocational education. For example, all trainees of
MELR vocational training centers and Welcome to Job Mono‐centers take a mandatory module on the
fundamentals of entrepreneurship as part of their vocational training courses. In addition, separate
courses (assessed and certified) on socioemotional skills, business plan development, legal skills, financial
literacy training have been introduced for microentrepreneurs.119 However, there is no data on
participation rates and associated costs can discourage some individuals. Those who have completed the
entrepreneurship courses are eligible for start‐up subsidies from the ESCs: 6,491 had received the start‐
up subsidy in 2020 (Table 2). Moreover, since 2020, youth and women who complete business training
117 Most of this pays for the student’s stipend and tools, while the remainder covers a small wage subsidy to the employer. 118 Evidence shows that non‐financial services (e.g., business skills training, financial literacy training, mentoring, coaching, consulting services, and access to value chains and networks) are as important as access to start‐up capital, especially for youth who often face multiple challenges. Cho and Honorati (2014) and McKenzie and Woodruff (2014) show that programs which combine a capital component together with a training component tend to show more impacts on entrepreneurship success (becoming self‐employed, business survival, profits) than interventions which only relax the financial capital constraint. Graduation programs such as “Targeting the Ultra Poor” programs, which propose a multifaceted approach to address the various constraints faced by vulnerable individuals (access to capital, financial literacy, lack business skills among others) have been found to be cost‐effective instruments to sustain livelihoods, and its effects have been documents in more than six countries across continents (Banerjee et al. 2014; Bandiera et al. 2013). In addition to business skills training, Campos et al. (2017) have shown that training focused on mindset and soft skills (such as the Personal Training Initiative, piloted in Togo) is another instrument effective in fostering entrepreneurship. Andrews et al. (2021) review the existing evidence on economic inclusion programs. 119 The curriculum of these courses was developed by the International Labor Organization and consists of 120 academic hours (4 modules) and is based on the principle of 30 percent theory and 70 percent practice.
60
provided by NGOs on the basis of curricula and requirements established by the Entrepreneurship
Development Agency and the Graduate School of Business and Entrepreneurship can be reimbursed 120.
Women entrepreneurship has also been recently promoted through skills development, concessional
loans and cooperatives, often in partnership with local NGOs. Since 2019, the government has tried to
link concessional microloans with vocational training programs for women interested in setting up
businesses in sectors such as catering, hairdressing, manicure and pedicure, hotel services and accounting.
Between 2019 and 2021, MELR trained almost 4,000 women in cooperation with non‐governmental
institutions engaged in training in entrepreneurship. Almost 6,000 women received entrepreneurship
training under a joint project with the Association of Women Entrepreneurs of Uzbekistan "Tadbirkor
ayol" ("Business women") and the People’s Bank, out of which 2,600 received concessional microloans to
start their own businesses. A new subsidy has been introduced to promote the establishment of
cooperatives among women: 76 women's cooperatives are currently functioning involving 7,411 women,
almost all of them are managed by women.
The job search assistance service implemented by ESCs aims to address informational constraints by
locating vacancies and matching jobseekers with appropriate (formal) jobs. Jobs proposed to jobseekers
should be ‘’suitable” and location and previous work experience are often top criteria for the matching
with vacancies. In practice, cognitive and non‐cognitive skills are rarely considered for the matching, nor
assessed among jobseekers. In 2020, about 360,000 jobseekers received job search assistance and were
referred to jobs by ESCs (44 percent of the registered jobseekers) based on MELR data (Table 2). The
service is open to all jobseekers, including those who are employed and non‐vulnerable. Some categories
like registered unemployed receiving unemployment benefits121 and temporary migrant workers
(returnees) are required by law to go to the ESC bi‐weekly for an interview and to review available
positions. In practice, the majority of beneficiaries are low‐skilled rural youth, women, and migrants; very
few beneficiaries have been laid‐off workers. Interviews revealed that many staff have difficulties
recruiting, particularly among youth, who prefer jobs in the private sector (about 80 percent of jobs
offered by ESCs are public sector jobs) and among women who avoid employment outside the home due
to childcare obligations or work on a family farm. Some ESCs report that they have more job openings
than applicants. To improve the odds, ESCs have started recruiting through community and home visits
by roaming ESC staff (“labor inspectors”), in coordination with formal and informal local authorities
(mahalla, hakimiyat).122
Special training courses tailored to labor migrants have been established for the development of their
professional and foreign language skills. About 10,000 citizens were trained in over 20 types of
professions and 1,200 were trained in Russian, English, Korean, and other foreign languages in 2020. Pre‐
departure training services also include training in labor legislation of the destination country and in
120 Reimbursement in the amount not exceeding UZS 1 million. Resolution of the President No. PP‐4862 "On additional measures to improve the system of involving the population in entrepreneurship and entrepreneurship development". 121 Any individual registered with an ESC, regardless of income or other trait, can be designated as “unemployed” if he/she has marketable skills but cannot find a job (is rejected from at least two suitable jobs) after 10 days of searching. Individuals with few marketable skills are sent to training and given opportunities to search before being designated as “unemployed”. Before granting an individual “unemployed” status, the ESC asks mahalla to confirm that he/she is not drawing a salary from any formal job. 122 World Bank (2020).
61
occupational safety and health. Special microloans for labor migrants have been introduced and are
accessible through the Single Registry. At destination, other services facilitate the integration: material
and social assistance was provided to over 54,800 labor migrants in Russia in 2020. In 2021, 65,000
vacancies were identified for Uzbek migrants abroad.123 The majority of jobs are in the construction sector
(82.7 percent). The remaining 13.8 percent are in the services sector and 2.8 percent in agriculture.
In general, existing ALMPs are not tailored to match the specific needs and constraints of pre‐selected
target groups. The profiling of jobseekers is non‐existent, and there is no standard taxonomy of
competences and skills for job matching, which relies only on occupation categories. Understanding the
characteristics of jobseekers is key to the design of effective policies and measures, especially for those
jobseekers with multiple constraints to employability and participation. Youth most often fall within such
categories. Currently, the ESCs do not have a dedicated function for profiling or the respective tools or
resources, including data and staff capacity.124
The use of public employment services and programs
Despite the existence and expansion of government‐sponsored training and employment promotion
programs for the unemployed, there is limited awareness among youth and employers. The majority of
youth who participated in the focus group discussions are not familiar with Employment Support Centers
(ESCs), the services and employment promotion programs they provide. Public works and concessional
microloans are the programs that are known; however, youth noted that public works are not attractive
given the temporary nature of the jobs and the low pay. MELR has recently introduced a program in
schools to raise awareness on ESCs and their services; the program is not universal and rural areas are not
reached.
The few youth who have registered with ESCs expressed disappointment with the quality of services.
They report that ESCs mostly offer low‐skilled and low‐paid job postings. Their job‐matching function is
not effective for the limited pool of vacancies requiring specialized post‐secondary education. The issue
of irrelevant vacancies in the ESC database was raised by almost all youth participating in the focus group
discussions. ESCs officials recognize that many firms do not report vacancies to ESCs, creating discontent
among youth.
Firms themselves have limited interactions with Employment Center Services, and a low awareness of
available employment programs. Only 16 percent of firms report having interacted with ESCs in the past
two years. In Tashkent region (8 percent) and among small firms (13 percent) the share of interaction with
ESCs is low, while in the other regions and for larger firms the share of interaction with ESCs is significantly
higher (Figure 29). That said, even among larger firms, not more than a third of interviewed firms report
interactions with ESC. The lack of interaction reflects mostly a lack of knowledge among firms. Among
those who report no interactions, around 80 percent are not aware of the existence of training subsidies
for new hires who were recruited based on ESC referrals or the wage subsidy for hiring socially vulnerable
jobseekers above the minimum reserved number of positions. This proportion is slightly lower in regions
other than Tashkent but remain around 76 percent.
123 Specifically, 59,500 vacancies were identified in Russia, 4,800 in Uzbekistan, 303 in other countries. 124 The Ministry of Employment and Labor Relations, with the support of a World bank credit, is in the process of developing tools and capacity to provide more individualized services.
62
Figure 29 : Interactions between firms and Employment Support Centers
Source: World Bank (2021).
Note: See methodology in Annex 2. Other regions include Bukhara, Kashkadarya, Khorezm, Samarkand, and
Ferghana. See Annex 2 or footnote 143 for the sectors definitions.
Among firms engaged with ESCs, very few participate in employment promotion programs. Even among
firms active with ESCs, less than 10 percent participate in the wage or training subsidy programs for
jobseekers and unemployed. Most of the reported interactions relate to sharing information to ESCs on
open vacancies (63 percent) and on receiving applicants referred by ESCs (56 percent). In terms of
intermediation, 30 percent of firms use ESCs for recruitment, which is comparable to the share of firms
using online job portals or social networks to advertise vacancies. However, this is half the use of informal
network. When asked why they do not use more ESCs to find candidates, 45 percent of firms say they do
not see the need (given they find suitable candidates by other means).
There is virtually no ESC outreach strategy for employers. ESCs need a stronger communication and
outreach strategy and action plan for firms, not only in explaining the available programs but also in
16%20%
13%
9%
21%
13%
31%
20%
5%
19%
63%
74% 73%
27%
74%
58%
73%
63%
57%
63%
56% 56%54% 55% 57%
59%
50%
65%
38%
53%
9% 12% 9% 9%
9%9%
8%11%
0%
9%8%5%
7%
19%
5%
7%
11%
2%6%
13%
7%
11%
6%0%
10%7%
9% 7%
0%
9%
All Positive orstable growthperspective
Internationaloriented firm
Tashkent city Other regions Small firms(<20)
Larger firms(>=20)
Manufacturingand
Construction
Retail Other services
Has interacted with ESCs in the past 2 years
Interaction type : Informing ESC about vacancies / positions in the firm
Interaction type : Receiving applicants referred by ESC
Interaction type : Receiving wage subsidies for hiring socially vulnerable jobseekers (above quota program)
Interaction type : Consultations on various issues
Interaction type : Reimbursements to the employers for the vocational and advanced training fees of new hires
63
helping find candidates. Increasing the placement role of ESC would help jobseekers and youth
disconnected from the traditional personal networks, which remain widely used for recruitments.
The low awareness about employment programs is also a consequence of their limited effectiveness.
The few unemployed youth who know the availability of training and retraining programs consider them
irrelevant for in‐demand jobs or impractical for improving employability. Job fairs are also considered
unhelpful, carried out only for reporting purposes by both youth and ESC officials. Job fairs organize face‐
to‐face meetings of representatives of public enterprises and the unemployed, presenting vacancies that
are already posted in ish.mehnat.uz. They are organized at the initiative of a Women’s Committee,
Khokimiyats, ESCs, and the Youth Union. Mahallas are mandated to bring in unemployed, but they care
about reaching a minimum number of citizens rather than bringing potential employees who could be
matched. For example, a job fair, which involved more than 10 enterprises and more than 50 people, led
three potential candidates with no guarantees of employment. Only 19 percent of firms report using job
fairs to recruit (see above, Figure 16).
Unemployment benefits are not easy to access by the unemployed.125 For example, a representative of
an ESC in a district where the number of unemployed exceeds 35,000 people, reported that only 7
unemployed receive benefits. There is no doubt that a similar situation is encountered in other districts
and in all regions. Obviously, the low coverage is due to insignificant funding (almost absence) of
unemployment benefits. On the other hand, young people are aware and declare that passive protection
measures in the labor market are unacceptable and strive to get a job. Despite the job losses incurred
from the COVID‐19 pandemic and the provisional regulation adopted by the government to simplify the
access to unemployment benefit,126 unemployment benefits were granted to about 89,951 people in the
whole country in 2020. This is a remarkable increase with respect to previous years, corresponding to
about 14 percent of the total registered unemployed.127
Weak public employment services push some youth to rely on local parastatal organizations that are
not mandated or funded to promote youth employment. Interviews with experts indicate that
unemployed youth often turn to parastatal public organizations for support to search for employment,
most often the Youth Union, Mahallas, and, until recently, the Women's Committee.128 However, youth
complain they most often do not receive the practical support needed, as these organizations do not have
enough legal authority and financial resources to provide employment services. There are practically no
125 Unemployment benefits are insurance‐based. Only formally wage employees are eligible; self‐employed are not a part of the scheme. The qualifying conditions include having worked for at least 12 weeks in the last 12 months and registration with an ESC. 126 Internal Order of the Minister of Employment and Labor Relations #95. 127 The coverage of unemployment benefits during the previous years was lower: 57,874 in 2019, 14,477 unemployed in 2018, and about 10,428 people in 2017. As of June1, 2021, the unemployment benefit recipients are 72,920 (MELR 2021). 128 The Women’s Committee expanded its responsibilities significantly since 2016 to provide targeted support for women’s employment and entrepreneurship, particularly young rural women. President Mirziyoyev assigned the Chair of the Women’s Committee as the Vice Prime‐Minister. A Public Fund to support women and families was established under the Women’s Committee to help women to organize entrepreneurship, craftsmanship, and skills training reflective of labor market demands. In 2020, the Women’s Committee was abolished, and its mandates evolved into the new Ministry of Mahalla and Family Affairs. The extensive network and support that the Women’s Committee established throughout Uzbekistan were transferred to the new Ministry, including the Public Fund to support women as well as human resources and senior leadership.
64
non‐governmental organizations in Uzbekistan whose main mission is to promote youth employment,
also confirmed by youth interviewed for this study.
Labor market and educational information systems
Uzbekistan’s education and labor systems lack a data culture for evidence‐based decision‐making
processes. The pre‐independence legacy (of central planning and control) contributed to poor data quality
production and subsequent utilization. As a result, decisions are not usually made based on quality data
or on any data at all. Since independence, the country has made progress with data collection and
utilization in different sectors of public administration, including labor, especially in the last couple of
years. Improvement in the collection, use, and dissemination of quality education and labor data needs
to be expedited to keep up with the relevant reforms promoted by the government.
The lack of a coordinated monitoring and evaluation system at MELR is a serious challenge to improve
the performance management of ALMPs and inform evidence‐based policy making. Local ESCs collect
detailed data on jobseekers at registration, at every visit to ESC, on participation in ALMPs implemented
by ESCs, and upon eventual “exit” after successful placement. This last includes data on past work history,
job preferences, job rejections, and final job offer details. Theoretically, the data should be collected by
ESCs and used to inform both its local programming and the MELR’s oversight and policy planning. In
practice, the data are collected at ESCs but not used to inform policy and budget decisions. This is partly
due to a lack of an operational management information system (MIS) and partly due to a lack of a
monitoring and evaluation (M&E) culture.
Employment program and service monitoring data are not easily accessible and information systems
are largely rudimentary. ESCs lack a robust MIS although MELR has recently expanded the Integrated
Single Window Office to register online applicants for employment services and programs. Beneficiary
databases are often stored on local computers and are disconnected from the online employer database.
Some ESCs do not store beneficiary data electronically at all. MELR required all ESCs to introduce
electronic bookkeeping, but ESCs face capacity constraints. As a consequence, central‐level authorities –
specifically the MELR and Ministry of Finance – lack updated information regarding actual beneficiaries,
employment trajectories, and individual payments. Funds are transferred to the district level where
programs are implemented without clear reporting mechanisms. The Integrated Single Window Office
represents the first step to install an electronic monitoring system.
The Unified National Labor System (UNLS) is being developed to improve the quality and access to labor
market data, yet an integrated digital information system does not exist.129 UNLS, hosted in MELR, will
support MELR and ESCs to provide better information to jobseekers, students, and employers to improve
job matching. It will integrate existing employer‐employees electronic records database, the “electronic
workbook” (information on employee work experience), the Integrated Single Window beneficiary
information system used by ESC, the national Job Vacancy platform/database ish.menhat.uz,130 the labor
migration information system, and, in the medium term, the database of vocational education and
training graduates. A data warehouse will facilitate analytics, analyze trends, and track basic indicators to
129 Executive Decree No 3856 of 14 July 2018. 130 An improved version of the job portal ish2.mehnat.uz is currently being developed to automatically display vacancies by employers registered in the UNLS.
65
monitor employment programs and services performance undertaken by the ESCs. UNLS became
operational in January 2020 and as of June 2021, included the electronic records of formal employer‐
employee contracts (mandatory) and the electronic workbook, covering 492,000 employers and оvеr 4.8
million employees. It does not yet have the capacity to generate statistics on labor market trends, which
is hampering the ability of career guidance systems to inform educational choices.
Uzbekistan does not have a culture of tracing the employment status of primary, secondary, or tertiary
graduates. There are no systematic initiatives to trace VET graduates’ employment status, only a few
vocational colleges do trace their graduates, the modality and frequency also varies across colleges. In
some vocational colleges, visited for a rapid assessment of Uzbekistan VET’s system,131 quasi‐tracer
studies were in place. College representative visit companies that hire their graduates to collect feedback
from supervisors on their graduates’ job performance. Such feedback was reported to be used for
improving teaching and training programs. Other colleges track their graduates for one year. At that time,
if students are still employed in the areas that match their trained specialization, colleges’ administrators
receive cash bonuses as an incentive.
Finally, the lack of effective skills and occupation forecasting mechanisms contributes to the mismatch
between skills demand and supply. Another significant problem that acts as a factor in the mismatch
between the qualifications of young people and the skill requirements of employers is the lack of an
effective mechanisms to forecast labor market needs, occupations, and skills demand. The vocational
training system is not responsive to the evolving labor market needs in part because there are no tools to
estimate the short‐ and medium‐term labor demand. As a result, large numbers of young people
improperly credentialed and with qualifications not in demand enter the labor market each year.
131 World Bank (2018a).
66
8. Building an effective youth employment policy
Summary of findings
The report identifies the following key challenges, summarized in Figure 30:
1. Information and in‐school career guidance is almost absent. Students are unprepared when they
transition from school to work. Neither schools nor parents provide them with the labor market
information needed to inform their decisions. They do not have access to updated information on
the regional labor market, industry trends, or firms’ demand for specific skills or specializations.
Uzbek school graduates make their education and professional career choices based on perceived
interests, preferences, and ambition. Youth reported not to know what occupations are in
demand, or pay better, and what educational paths are necessary to enter a particular
occupation. As a consequence, information gaps prevent optimal decisions and investments.
Youth come with very high expectations on wages and job aspirations that are often unmet.
Aspirations become less ambitious as youth try to transition from school to work – and may lead
to discouragement. Professional preferences play a much stronger role among school graduates
than for young unemployed and workers. The personal network of their families plays a major
role in finding a job opportunity, thereby reinforcing inequalities for those with poorer
background.
2. Inactivity rates and discouragement are high among youth mostly due to social norms, low
wages, and limited “formal” job opportunities (in addition to unmet aspirations). Uzbekistan
has the highest NEET rate in the region based on the HBS, the rate is particularly high among
young women mostly due to social and cultural norms. Low levels of formalization and
opportunities for wage employment are among the top impediments for youth wage
employment. Most youth noted that they are hired without formal registration and without
opening an employment record book. Youth who have hard times finding a decent job are at risk
of becoming discouraged and dropping out of the labor force. The “discouragement rate” is high
in Uzbekistan compared to the regional context, reaching 5 percent among age 15‐24 compared
to less than 2.5 percent among age 15‐24 in most neighboring ECA countries. Labor
discouragement is higher among young women and in rural areas: for age 25‐29 the
discouragement rate among women is 40 percent higher than among men; for rural areas, the
discouragement rate is almost 50 percent higher than for urban areas.
3. The lack of good job opportunities at home has made organized labor migration a common
employment strategy option, mostly for young men. The qualitative evidence collected through
focus group discussions with youth shows that local labor conditions, mostly low wages and
informal work, push unemployed youth – especially with vocational education ‐ to consider
international migration, while internal migration is less attractive (also due to regulatory
constraints linked with the propiska permit system and licensing and minimum education
requirements for certain occupations). The constraints faced by the Uzbek migrants related to
their legal protection, awareness of their rights and entitlements, limited information on formal
jobs abroad, insufficient skills, information on key processes, costs and benefits of labor
67
migration, and budget constraints to migrate and remit money. There is also a strong gender
aspect of international migration: over 90 percent of labor migrants are men. Women are
stigmatized because they leave their places of residence for work, especially in cases where their
husbands or children do not accompany them.
4. Large skills mismatches and skills gaps affect hiring and job satisfaction. The low quality of
technical skills provided through both the general education system and the technical and
vocational are recognized by both youth and employers. Employers and education institutions are
not connected enough to ensure that curricula are adequate and transfer labor‐market‐relevant
skills. As a consequence, employers almost exclusively value work experience as post‐secondary
professional diplomas are not a certificate of relevant technical skills, leading to further
penalization of youth. Skills gaps are perceived especially for youth with vocational post‐
secondary diplomas, which are seen as outdated and not providing the needed technical
competences. As a consequence, employers look for higher education, tertiary education
diplomas even for jobs requiring technical skills from specialized professional training. On the
other side, youth report severe barriers to enroll in universities as there are few and are not
affordable to all (rural youth who would need to move to cities where the cost of living is much
higher). Few firms provide training to compensate for the lack of qualifications, and even fewer
provide formal training, which prevents its workforce from increasing their productivity.
5. There is high interest among youth to start up small businesses, though constraints hinder
access to sustainable self‐employment. According to interviewed youth and representatives of
Chamber of Commerce, Employment Support Centers (ESC), and youth groups, the key challenges
to entrepreneurship include the lack of skills and training opportunities leading to weak business
plans; limited access to soft loans with concessional rates and lack of alternatives to access capital;
high competition with established firms; and limited local consumer markets in rural areas.
6. Social stereotypes and cultural norms have a profound impact on young women’s participation
in economic activities, access to good employment opportunities, and on gender pay gap.
Traditions that foster early family formation and assign household duties largely to young women
effectively remove them from accessing job opportunities. Women are also restricted in certain
occupations (though the revised labor code under review removes gender discrimination in all
occupations, see Box 7). Almost all youth participants of focus group discussions, both men and
women, believe that the salary of a woman can be significantly lower than that of a man for the
same job/occupation. Respondents also admit that employers offer young women lower wages
than a man for the same job because women cannot permanently work overtime or perform
heavy physical work. While equally interested in entrepreneurship, young women do not pursue
their entrepreneurial projects. Women are not equally represented in the workforce (only 40
percent of the workforce) and especially in higher‐skilled occupations such as management
positions.
7. The government is implementing a wide range of youth employment program and investment
in active labor market programs (ALMPs) increased in the past three years, though coverage is
still limited compared to the needs and their effectiveness is unknown. Since 2018, the menu of
ALMPs expanded to include hiring (wage) subsidies for socially vulnerable employees, training
subsidies for new hires though the ESCs, apprenticeships, new vocational training and re‐training
68
courses at new established training centers, public works, job search assistance, start‐up
registration and insurance subsidies, the program “Youth – Our Future” to support youth
entrepreneurship through the provision of loans at preferential rates through state banks (“soft
loans”), the provision of tax benefits for enterprises employing youth. Evidence on their
effectiveness in terms of employment outcomes is unknown and basic monitoring data is very
difficult to reconcile. Based on MELR data, 12 percent of the registered jobseekers with the ESCs
received employment support programs from ESCs (employment subsidies, training and
apprenticeship excluding microloans, public works and Youth is Our Future program) and about
521,000 public works were subsidized in 2020. Among the registered unemployed, more than a
third (39 percent, about 321,000) are youth, most of whom live in rural areas. The coverage of
employment programs among youth is about 18 percent and 14 percent among female registered
jobseekers, while only a third of the public works programs were occupied by youth.
8. Almost all youth and employers interviewed are not aware of public employment services and
programs. The online public job portal ish.mehnat.uz. is almost unknown by youth, who find it
very difficult to register and not user‐friendly, as employers cannot contact them. Jobs offered by
the ESCs are not attractive, as they are mostly low‐skilled and low‐paid job postings. There is
limited pool of vacancies requiring specialized post‐secondary education. Employers are
mandated to register with ish.mehnat.uz but do not rely on it as a recruitment channel. Personal
networks and private online portals are instead the main channels to search for employment.
Despite the recent expansion of government‐sponsored training and employment promotion
programs for the unemployed, there is limited awareness among youth and employers. Only 16
percent of firms report having interacted with ESCs and among those, the request of wage
subsidies (above quota) or training subsidies is a minor fraction.
9. Information (results) about youth employment programs and services is fragmented, dispersed,
and incomplete. Basic program monitoring data such as number of applications, reasons for
acceptance or rejection of applications, or actual spending are not readily accessible or available
for most programs. To our knowledge, employment programs lack some form of evaluation of
outcomes such as employment status (6, 12, or 24 months) after program completion, quality and
characteristics of work, or salary level. Without clear and transparent information on key program
information, it is difficult to know how to strengthen current efforts, improve effectiveness, or
discontinue programs that are not cost‐effective.
10. Labor mobility between sectors remains limited by complex occupational licensing and
credential requirements. Uzbekistan’s labor market remains heavily regulated, requiring higher
education and other licensing for 70 percent of listed occupations. Some occupation licensing
requirements (e.g., licenses to produce audiovisual works, realtor activities, and electronic
equipment rentals) have been simplified in recent years, but others remain a constraint to greater
labor market efficiency. In addition, labor mobility has been constrained in the past by a rigid
propiska system (residence registration). In the past four years, the propiska system has been
simplified to allow people to work in a region other than the region of residence. However, the
rights of Uzbeks to move internally is not fully granted, as an employee in the private sector must
pay a “propiska tax” or state tax for temporary propiska once per year.
69
Figure 30 : Key labor market challenges specific to youth
Box 7 : The revised Labor Code
The current labor code adopted in 1995 is ill‐suited for the new realities of the labor market and the
economic reforms. A new labor code has been prepared since 2019, consulted, and is about to be adopted
to best respond and accompany the transition to a more flexible labor market.
Overall, the draft Labor Code, if approved, strengthens the protection of workers in Uzbekistan, especially
mothers with small children. One of the key changes introduced in the draft Labor Code is the right for
employed women to receive equal pay for work of equal value, which represents a major step forward to
achieve gender equality in pay. It builds on the the Law on No. ZRU‐562 dated September 2, 2019 "On
guarantees of equal rights and opportunities for women and men" in alignment with "Equal Remuneration
Convention".
Second, the revised labor code proposes to revise the minimum wage at least once per year (Art. 262).
The current practice has been to adjust minimum wage infrequently. Based on ILO data for 75 countries,
the minimum wage level is most frequently set at around 40 percent of mean wages. In Uzbekistan, the
70
ratio of the nominal legal minimum wage to average nationwide wage (so‐called Kaitz index) of 0.287 is
relatively modest.132
Third, the revised Labor Code proposes to reduce the severance payment, which is currently quite modest
compared to comparator countries – between one to three monthly wages: one month of severance pay
automatically; a second month of pay if employee is still unemployed after two months; a third month if
the employee is still unemployed after three months and has registered with the local ESC. Given the
approval of the privatization and restructuring of SOEs, it is more beneficial for redundant workers to keep
the old formula for severance payment. In the event of mass layoffs of workers, local governments may
suspend such decisions, with simultaneous partial or full compensation for losses caused by this delay to
the employer, for up to six months. However, local authorities usually lack funds to cover the losses.
Uzbekistan has one of the most generous systems of maternity and parental leave. For example, women
are granted maternity leave for 70 calendar days before childbirth and 56 (in the case of complicated
childbirth or the birth of two or more children ‐ 70) calendar days after childbirth, with payment of
benefits in the amount established by law, but not less than two‐thirds of average monthly wages. At the
end of maternity leave, upon request, a mother may be granted parental leave until the child reaches the
age of two years. A mother is also granted additional unpaid leave to care for a child until the child reaches
the age of three years. The revised labor code still entitles mothers only to take parental leave. While
fathers may also take parental leave, the revised labor code does not establish paternity leave. Family
leave entitlements have especially positive implications for the care of children and their cognitive
development (especially in the absence of early childhood facilities), as well as encouraging re‐entry into
the labor market, and enabling people to remain at work.
Another important area for improvement is the provisions for part‐time workers. Part‐time workers are
only partially covered with social protection schemes while their conditions should be equivalent to
comparable full‐time workers in the fields of: (a) maternity protection; (b) termination of employment;
(c) paid annual leave and paid public holidays; and (d) sick leave. Conditions may be determined in
proportion to hours of work, contributions or earnings, or other methods
Source: World Bank assessment of key labor regulations as listed in the draft Labor Code 2020, dated March 2021.
Recommendations
While the report provides a holistic assessment of constraints to youth employment, the
recommendations will focus on strengthening the institution, regulation, and supply side of the labor
market that are relevant for youth. The analysis inevitably touched upon the broader set of issues related
to youth employment. Notably, the report provides evidence that the lack of jobs is one of the most
binding constraint reported by youth, together with low wages and inadequate skills. The lack of jobs and
slow creation of high‐productivity jobs requiring higher skills (in the “modern” service sector and highly
productive industry) is one of the main constraints to youth employment.
132 The average wage for 2020 was UZS 2.6 million. The minimum wage is currently UZS 747,300, based on https://stat.uz/en/official‐statistics/labor‐market.
71
The proposed recommendations to improve the skills, information, and employability of youth alone
are obviously not sufficient until demand side issues are addressed. Policies enabling the macro and
business environment for private firms to start up, grow, and create more jobs are a priority to foster job
creation for youth and the new generation. The SOE privatization process that has recently started,
combined with reforms boosting private sector development support, are key to foster job creation.
Prospects for future high‐quality job opportunities are linked with the development of private small and
medium enterprises, increased market competition, further development and expansion of the
professional services sector and high‐tech manufacturing,133 and foreign direct investments.
A roadmap for the youth employment policy agenda to improve labor market outcomes for youth and
to address the gaps and weaknesses of the existing policies and programs is proposed below. The
purpose is not to elaborate on the broader multi‐sectoral jobs agenda but to focus on specific aspects of
policy that can favor youth in their transition from school to the labor market. Error! Reference source
not found. proposes a summary of recommendations (short‐ and medium‐term actions highlighted in
bold) for different segments of the youth population. It recognizes the multi‐faceted challenges to achieve
job‐readiness while transitioning from school to work as well as the heterogeneity of situations across
genders and across urban and rural areas.
A Sequenced Approach: The short and medium term
In the short and medium term, there is a need to: (i) evaluate, reform, and expand existing ALMPs such
as wage subsidies and apprenticeships; (ii) expand the provision of skills and start‐up capital supporting
youth entrepreneurship based on youth needs and international good practice; (iii) support digital skills
development by mainstreaming them in schools and VET centers; (iv) provide better diagnostics of the
skills and occupation in demand and make educational and labor market information available for
students and young job‐seekers; (v) institutionalize age‐appropriate career guidance mechanisms; (vi)
design sensitization campaigns and role models, enhance the provision of childcare services, and enact
more flexible labor regulation to encourage active participation of young women in employment and self‐
employment; (vii) advance regulatory reforms to remove occupational and labor mobility barriers across
sectors and regions; (viii) facilitate organized (safe and productive) labor migration; and (ix) raise
awareness on public employment services and programs.
First, effective ALMPs such as wage subsidies and apprenticeships should be scaled up and reformed to
enhance their effectiveness and targeting based on rigorous evidence. The report shows that the
government has launched a broad menu of ALMPs, some of which are specifically targeted to youth.
However, the scale is small compared to the demand and the targeting could be improved to prioritize
vulnerable youth who are more difficult to place. There are several promising ALMPs (apprenticeships,
training subsidy for new hires and wage subsidies for vulnerable employed) though no evidence exists on
their effectiveness in terms of employment outcomes (i.e., quality of jobs, earnings, or employment status
over time). International evidence shows that wage subsidies could be promising instruments to address
high tax wedges employers face. The design of existing wage subsidy programs could be strengthened to
prioritize youth as a vulnerable group and provide incentives for firms to retain young workers and
upgrade their skills. The close involvement of the private sector in the design and implementation of
ALMPs has proved to be a key factor of success. Monitoring performance and assessing results of existing
133 ADB (2020).
72
ALMPs are key to inform evidence‐based policy making and to enable the government to make optimal
decisions such as discontinuing or reforming ineffective programs to best respond to the need of youth
and to invest more and scale up programs that work. Better diagnostics requires better data and tools:
accurate program level monitoring data, employer feedback surveys (when they are involved as in the
case of apprenticeships and wage subsidies), and, when resources are available, selective impact
evaluations to assess outcomes against proper counterfactual and cost‐effectiveness analysis. Solid and
comprehensive M&E systems would also trigger a virtuous feedback loop to the program management to
inform corrective actions based on results and adapt the program future design and implementation to
improve performance.
Second, concessional financial support to start up a business should be accompanied by business skills
training and other complementary services to foster productive self‐employment and
entrepreneurship. The promotion of widespread entrepreneurship and small and medium enterprises is
crucial to the transformation toward a market economy in countries in transition. To increase productivity
growth and sustainability among young entrepreneurs, it is critical to upgrade their skills to prepare
business plans and manage small enterprises and broaden their access to markets and value chains. These
can be achieved by providing skills training tailored to potential young entrepreneurs, including to foster
socioemotional skills and entrepreneurial mindset. Complementary services such as government‐
sponsored business development services, coaching, temporary childcare during the training, business
incubators to promote networks, creating incentives for registration, and increasing awareness of the
benefits of formalization to then expand the access to formal financial tools.
Third, digital skills should be mainstreamed in both schools and VET centers to unlock new types of job
opportunities. The report provides evidence of high demand for digital skills which are now part of the
foundational skill sets of workers. Stronger digital skills are expected to have an impact on the
employability of youth as well as productivity of small firms. They could help open new forms of digital
entrepreneurship opportunities through e‐commerce platforms, for example, and also provide interesting
gig/digital opportunities and home‐based work for young women or people with disabilities who have
mobility constraints or are constrained due to social norms. One way to scale up the digital skills agenda
is to mainstream digital skills in schools, educational institutions, and vocational training centers and
colleges. In addition, the pandemic experience has proved that adopting hybrid training delivery models
(combining in‐person and remote training) and distance learning improves the digital skills of students
and jobseekers.
New data collection tools need to be institutionalized to improve the quality and availability of
education and labor market information and to inform policy as well as youth aspirations and career
decisions. Labor market information failures contribute to skills mismatches. On the labor demand side,
attention needs to turn to collect, analyze, and regularly report occupations and skills in demand based
on firm‐level data and available “big data” and job postings data in online job portals. There is no regular
and comprehensive reporting on the number, type of vacancies, or skills demanded by firms. The labor
force survey conducted by MELR and the HBS collected annually by the State Statistical Committee are
not sufficient to understand youth constraints, what works and why. They will need to be complemented
by qualitative and specific quantitative surveys of youth, tracer studies to track outcomes after program
completion, participation in PIAAC, and measurement of skills throughout the school life cycle.
73
The government should play a critical role not only in generating data but also in coordinating and
disseminating labor market and education data. The development of the Unified National Labor System
(UNLS) – in the reform roadmap since 2019 – should advance to make labor market data accessible and
to enable students and jobseekers to make informed career choices. The development of UNLS requires
the upgrade of the vacancy database mehnat.uz to simplify employer registration and interaction with
jobseekers and the collection of data on the skills and labor‐market trajectories of graduates from
education institutions and VET schools. Many countries have set up labor market observatories to be in
charge of producing the information and intelligence for labor market information system and
disseminating it to key stakeholders, including educational institutions to help them rethink their curricula
and better adjust to labor market needs. Labor market observatories (LMOs) can be separate agencies or
a department in a ministry. Through the UNLS, MELR has a coordination role to play by integrating the
youth employment and education data collected by several institutions (and MELR’s subordinated
agencies), the Ministry of Higher and Secondary Specialized Education, and the Ministry of Public
Education, and the National Statistical Committee.
Career guidance tools should be enhanced, and the existing education and labor market information
should be more accessible, user‐friendly, and relevant to students and parents. Early provision of
relevant educational and career orientation and exposure to the world of work are important for grade 9
students. The existing in‐school career orientation can be made more effective by including more up‐to‐
date information about labor market trends in Uzbekistan and by scaling it up to all schools in the country.
Information technology and media could be better leveraged to make information more accessible.
Education institutions need to play a better role at career orientation through mentoring, counseling,
assessment, and engagement with employers to provide incentives for demanded skills. Early access to
information on labor markets and potential careers are key to shape students’ aspirations and adjust their
expectations. Internships during the last years of secondary school may also help students acquire
information and direct experience to inform their career choices. The involvement of parents in youth
counseling is also an effective strategy to advise their children on educational and occupational decisions.
The provision of childcare services, communication campaigns, and more flexible labor regulation
should be considered to reduce the gender gap in labor force participation. Expanding the supply of
affordable early childhood development services would help women balance family responsibilities and
work. Communication campaigns could be designed and conducted to increase women’s participation in
the labor force. Other interventions could include making maternity benefits more flexible to allow
women to split them with fathers so that mothers can go back to work earlier, which should be considered
in the draft revised labor code. One positive aspect of the new labor code is to give employed women the
right to receive equal pay for work of equal value. Whether this principle will materialize on the ground
in the current circumstances is still in question, but it is a major step forward to achieve gender equality
in pay. Finally, additional policies to be considered include requiring employers to provide paid leave for
workers to take care of sick relatives and making childcare payments tax deductible for both men and
women. These have been introduced in high‐income countries and the available evidence seems to show
that they improve women’s work–life balance134 and would be consistent with the Strategy for Achieving
Gender Equality in the Republic of Uzbekistan 2020‐2030.
134 World Bank (2020f).
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Regulatory reforms are needed to remove unnecessary occupational licensing and educational
requirements and other constraints to labor mobility. A review of the occupational licensing and
educational requirements is needed to assess and inform the removal of unnecessary and discriminatory
licensing and requirements. The propiska system could be further relaxed to allow free movement of
workers across regions. The revised draft labor code – under review and expected to be approved in 2021
– protects workers well in Uzbekistan, especially mothers with small children (Box 7). It is recommended
to establish mechanisms to support the implementation of the code and enforce the non‐discrimination
principles in the labor code with respect to protected groups, including youth, people living with
disabilities, and people discriminated again due to their gender.
The benefits of organized labor migration could be further maximized. Temporary labor migration offers
opportunities, especially for the youth unemployed in rural areas, to take advantage of wage differentials
between Uzbekistan and destination countries. There are several ways by which the government could
enhance the benefits of safe and productive migration. Appropriate legal frameworks and oversight
capacity could be further developed to facilitate safe labor migration for better paid and secure jobs.
Programs to raise awareness of the rights and existing mechanisms for the protection of migrants,
especially among women, should be expanded. Comprehensive training programs of pre‐travel training,
including literacy improvement, qualification training, targeted employment, and creation of accessible
language training centers in all regions of the country should be expanded. Social guarantees for the
pension rights of labor migrants should be strengthened. For those migrants who do return, ALMPs
including entrepreneurship support could be tailored to better facilitate their reinsertion into the labor
market. Partnerships between the Agency for External Labor Migration and destination countries could
be further built to: (i) identify skills and occupations in demand; (ii) make information on formal jobs
abroad available and publicly accessible, including specific information on qualifications, to improve job
matching; (iii) cooperate in developing the skills needed for specific occupations, for example by providing
specific training pre‐departure and harmonizing and jointly developing curricula and collaborating in on‐
the‐job training and dual training; and (iv) ensure equal treatment of Uzbek workers and natives in
destination countries in terms of wages and social protection, including access to healthcare insurance,
and especially for the low‐skilled who tend to face inequality in bargaining power.
Finally, communication campaign to raise awareness among youth and employers on the availability
and eligibility requirement of public employment services and programs should be designed and
implemented.
Long‐term actions
Over the long‐term, there are opportunities to improve youth employment policies to address some of
the more critical constraints, including the quality of the vocational education and training, access to
tertiary education the large gender gaps, and implementation capacity constraints. Based on a good
understanding of key constraints and international experience , it will be possible to (i) establish stronger
partnership with employers to improve the effectiveness of demand‐driven youth employment programs
such as the internships, apprenticeships and wage subsidies; (ii) strengthen the cooperation between
employers and education institutions to upgrade the curricula of vocational skill training and re‐training
in alignment with labor market needs and the revised national qualification framework and learning
assessment system; (iii) expand the access to tertiary education; and (iv) strengthen the implementation
75
capacity of Employment Support Centers (ESCs) to provide individualized employment assistance,
including through digital technology to facilitate the transition to jobs.
Stronger partnerships with employers could be established to improve the effectiveness and scope of
internships, apprenticeships, and wage subsidies programs. Strong partnerships with employers are
critical to gain information on available vacancies and to ensure that services are demand driven. An
employer outreach strategy could be defined setting clear objectives and the criteria to identify and
prioritize potential hiring firms within the firm registry (and in strategic sectors) and determine how they
should be outreached. Firms should be provided with tailored material on ALMPs that is short, accessible,
presenting the key messages that matter to them to mobilize and motivate their participation in wage
subsidies, internships, and apprenticeships programs. Strong coordination mechanism between ESCs and
employers’ associations would help to reach out and segment employers. The apprenticeship program is
one example that could expanded to other employers within tourism and light manufacturing sector
including food processing. Other forms of internships could be promoted for youth, especially for first‐
time labor market entrants.
The transition of youth from school to work could be facilitated by expanding work‐based experience
arrangements and strengthening the linkages between schools and employers. There are many options
that can be explored to introduce early‐on students to the workplace, from mandatory short‐term
internships to the integration of firms’ capstone projects in curricula. The dual VET model may be an
option for stronger and more systematic engagement between vocational colleges and employers.
Increasing the role of the private sector through internship is an important mean to provide first‐time,
work‐based experience that other employers value and thus can increase the employability of these
youth. The introduction of a temporary subsidy to students of post‐secondary and technical schools for
internships at enterprises could serve as an incentive for young people and their parents. The participation
of employers could also be strengthened in the entire cycle of vocational skill development from curricula
design, setting the standards to select providers, capacity building, tools, quality assurance to the
assessment of learning.
The professional post‐secondary and tertiary education as well as the short‐term professional training
for the unemployed should be re‐oriented to respond to labor market technical skill needs by upgrading
the curricula and teaching methods with stronger employers’ involvement. To find productive
employment, graduates of secondary and tertiary education institutions must have relevant skills and not
just diplomas. Digital skills and foreign languages are most in demand in the retail sector, and stronger
specialized technical skills in the manufacturing sector. This will require higher education institutions and
the VET system to upgrade their curricula, with the participation of employers; revise quality standards;
modernize training equipment and infrastructure; and improve the quality of teachers and trainers
building on the ongoing reform to develop a professional qualification framework and a system to assess
professional skills. Fostering more job‐relevant technical skills also calls for institutionalizing the links
between the education and training systems, between students and firms (through, for example,
apprenticeships and internships), and between firms and education institutions. Socioemotional skills are
also key, as behavioral issues are a major reason for employers’ dissatisfaction with young workers. They
need to be built along years of schooling.
More attention should be paid to transversal skills that are adaptable to the changing nature of jobs
and the technical skills needed for a greener growth model. Individuals need new skills, more
76
opportunities to learn, and higher levels of human capital to stay competitive and to keep up with the
evolving nature of labor demand and greener growth. Evidence suggests that globally, the skills content
of jobs is changing, with a decline in routine manual skills (which can be automated) and an increased use
of skills that require problem solving, interaction, collaboration, and creativity.135 Uzbekistan is the fifth
most carbon intensive economy in the world.136 While Uzbekistan has not made significant commitments
to addressing climate change,137 the transition to “greener growth” in the years to come is also expected
to have an impact on jobs: employment is expected to increase in certain sectors (e.g., renewable
energies, modern agriculture) and decrease in others (e.g., oil extraction, coal and petroleum refining,
cotton production). As Uzbekistan’s economy develops and will depend more on technology, innovation,
and services, the skill needs of the labor market will become more skewed toward these transversal skills
– in addition to the technical and socioemotional skills that can adapt to fast‐changing business and
production processes. Transversal skills such as foreign languages and computer literacy will also help.
Access to tertiary education should be further expanded. Higher university enrolment is necessary for
Uzbekistan’s employers to have access to enough highly skilled graduates. The government has made
tangible efforts to expand the number of universities and the enrollment rate in tertiary education.
Expanding access to tertiary education, especially for women and for students from rural areas and
disadvantaged backgrounds remains a challenge and is key to the country human capital development.
Targeted financial support and education waivers for vulnerable groups can help to equalize access to
tertiary education.
The capacity of the Employment Support Centers should be strengthened, and digital innovations
brought in for more efficient employment service delivery. ESC employment services are underutilized,
and jobseekers express little trust in ESC’s job placement capacity. More innovative delivery models for
skills training and employment services managed by ESCs could leverage digital technology. To improve
the quality of job intermediation services—job matching, job search assistance, and referral to training
and ALMPs—new tools should be developed to profile and orient jobseekers; ESC employees should be
trained to take on more specialized functions such as careful profiling of jobseekers and vacancies for better case management (assessment of job readiness). Outreach to employers needs to be intensified,
as ESCs rely on very few employers, most of them public, for recruitment and activation programs. Finally,
outsourcing some employment service to private providers to serve the hard‐to‐employ jobseekers may
be envisioned. A pilot is actually supported by the existing World Bank project, Strengthening the Social
Protection System.
135 World Bank (2018c); Bussolo et al. (2019); Ridao and Bodewig (2018). 136 After Central African Republic, Chad, Afghanistan, and Mali. 137 Uzbekistan’s contribution to the National Determined Contribution under the Paris Agreement calls for just a 10% reduction in carbon emissions per unit of GDP by 2030 compared to a 2010 baseline.
77
Figure 31 : Summary of proposed actions
Note: Bold indicates recommendations for the short and medium term, while remaining ones are long‐term recommendations.
78
Annex 1: Youth Focus groups discussion methodology
Overall, 267 youth participated in focus groups discussions (FGD) and 22 key informant interviews were
conducted with experts from eight types of organizations.
Sampling Strategy for FGD.
The qualitative study was conducted by RB Asia in four regions of Uzbekistan (“Qualitative analysis of
youth aspirations, job search efforts and discouragement in Uzbekistan”, Final Report, RB Asia, July 2020):
Samarkand, Fergana, and Khorezm regions and Tashkent city. About 36 percent of the labor force of
Uzbekistan is concentrated in the selected regions.
In each region, two locations for research were selected: one in a rural area and one in a city. In Samarkand
and Khorezm regions, the city of Samarkand and the city of Urgench were selected; and in Fergana region,
the city of Kokand was selected. This approach was due to a rather significant difference in rural and urban
labor markets, and it helped to identify differences in barriers and employment opportunities for rural
and urban youth.
The areas were selected based on the following approaches:
In each region, a district with a high level of unemployment was selected,138 where employment
opportunities are limited. Considering that all rural areas have limited employment opportunities,
especially for youth, this approach is the most acceptable.
In the different regions, the districts with different situations in the labor market and local
economy were selected. For instance:
‐ In the first region, an area with high unemployment and limited employment
opportunities;
‐ In the second region, an area with a specific structure of economy and employment, for
example, the Rishtan district of Fergana region, where the bulk of the population is
engaged in the cultivation and export of greenery, and the region is one of the few centers
of pottery. How the orientation of youth to the labor market is formed in such
environment was studied.
‐ In the third region, an area with average unemployment and more or less balanced
situation in the labor market.
Random sampling of the area may also be carried out. However, with a qualitative study, and
when only one district was required, such an approach was considered as impractical.
138 To determine the level of unemployment, the data of the quarterly monitoring of employment conducted by the Ministry of Employment and Labor Relations of the Republic of Uzbekistan will be used.
79
Within each district, three makhallas were selected on a random basis. It should be noted that makhalla
is a small territorial unit and makhallas that are part of the same district or city practically do not differ in
terms of socio‐economic development. Labor market for all makhallas of a district / city is single. In rural
areas, there may be slight differences between makhallas located in business and administrative centers
of the district and makhallas which were situated far from the center of the district. Considering this
situation, in the rural areas it was proposed to choose one makhalla in the center of the district, one
makhalla which was situated far from the administrative center and one makhalla, in which a secondary
specialized educational institution was located.
Overall, six FGDs ware conducted in each selected region: three FGDs in selected districts and three FGDs
in selected cities. Two FGDs per each group of youth aged 18‐30 with different employment status (NEET,
students in their last year of school, and recent graduates who were employed). About 10‐15 youth
participated in each FGD, including at least 50 percent women.
The sampling frame was received from the Makhalla Committees, Employment Assistance Centers,
Women`s Committee offices, Khokimiyats, and other relevant organizations.
Due to COVID‐19 lockdown, part of the FGDs (employed youth of Chilanzar and Yashnabad districts and
unemployed youth of Chilanzar and Yashnabad districts) in Tashkent city was conducted by video call (via
Zoom).
Sampling strategy for Key Informant Interviews
Key Informant Interviews (KIIs) were held in the selected districts and cities, with representatives of the
following organizations and persons at the district and city levels:
Employment Support Centers;
Women’s Committee (this organization implements a number of employment programs aimed at
women, especially young girls);
Uzbekistan Youth Union;
Chamber of Commerce and Industry of Uzbekistan (as an organization representing the interests
of private sector enterprises, it understands the needs of these enterprises in staff and their
problems with finding personnel. Also, the Chamber is aware of and assists in their employees
vocational training programs);
Centers for training and retraining of the unemployed, operating within the system of the Ministry
of Employment and Labor Relations, including those created by the Korean center KOICA;
Representatives of secondary education at district level;
Specialists on career guidance at college / school level;
Regional branches of Agency for External Labor Migration; and
Makhalla Committee.
80
In each region, KIIs with specialists of Employment Assistance Centers and the Youth Union of Uzbekistan
were held.
Table 3 : A1. Summary of FGD participants
Statistics of FGD participants
Regions Gender Education level
Samarkand, Fergana,
Khorezm regions and
Tashkent city
Men Woman Secondary
education
Secondary specialized
education
Employed Youth
38 42 17 63
Unemployed Youth
32 43 8 67
Additional FGD in Margilan City
6 3 4 5
School Graduates
46 57 103 0
Total 122 145 132 135
Table 4 : A2. Summary of KII participants
Statistics of KII participants
Employment
Assistance
Center
Agency of
External
Labor
Migration
Training/
Retraining
courses for
unemployed,
KOICA
courses
Woman's
Committee
Youth
Union
Mahalla Teacher
at School
Chamber
of
Commer
ce and
Industry
Samarkand
region 1 0 1 1 1 1 1 0
Fergana region 1 1 1 0 1 1 1 0
Khorezm region 1 1 0 1 1 1 0 1
Tashkent city 1 0 1 1 1 0 0 0
Total 4 2 3 3 4 3 2 1
Total number of conducted KII Interviews 22
81
Annex 2: Employer phone survey methodology
Field work and instrument
The firm survey which was initially planned “face‐to‐face” for Spring 2020 was conducted by phone, given
the constraints posed by the pandemic and repeated lockdowns. Enumerators received one‐day training,
followed by three days of practice (pilot survey) in October 2020. The questionnaire was adjusted
following the pilot. The final instrument comprised eight modules covering the key characteristics of the
firms, the labor constraints they face, the recruitment process and practices with a focus on youth, the
current status of the workforce in the firm including questions on skills, training practices, and the impact
of COVID‐19 on the activities of the firms.
The phone survey was conducted between December 23, 2020, and February 16, 2021 (with a holiday
break). The interviews covered 560 firms distributed over six regions of Uzbekistan: Bukhara,
Kashkadarya, Khorezm, Samarkand, Tashkent region, and Ferghana. The response rate of the phone
survey was 28.4 percent which is higher than expected given the quality of the contact data in the registry.
The sample has been stratified by regions, firm size, and sector, as detailed below.
Sampling frame and sampling strategy
The sampling frame relies on a business registry of firms (State Register of Enterprises) purchased from
the State Department of Statistics as part of this activity, covering six regions of Uzbekistan. Once cleaned
for the purpose of the survey, the frame represented 178,279 firms.139
The sample is stratified around two main domains: (i) geography (Tashkent versus the other five regions),
and firm size (small firms versus medium or large firms).140 This means that the survey can derive
representative statistics for the four strata described above, region x size.
We targeted a minimum of 120 units (interviewed firms) per strata (total sample of minimum 480 firms)
which is required for a 7.5 percent precision of an estimate in a 90 percent confidence interval, given our
population size.141 This means that we can guarantee that the population parameter is within the 7.5
percent range of the observed sample estimate, except in 10 percent of the cases. Across strata, we used
139 The initial business registry covering the six regions represented 181,632 firms. We removed firms with missing phone numbers and firms with invalid phone number (keeping firms with at least than five digits in the phone number). This reduced the frame to 178,279 firms. 140 The exact number of employees was not available for the whole frame; however, the classification between “micro” (0 to 20 workers, referred as “small firms” in the report to use international standards), small, or large firms (above 20 workers, referred as “larger firms” in the report and corresponding to medium and large firms by international standards) was available in the registry. Therefore, we rely on this variable. For statistical power reasons, we could not use the three firm size categories in the stratification and therefore grouped together firms with 21 to 50 workers and firms with more than 50 workers together. 141 Note that this is also the confidence level and precision level chosen for the Enterprise Survey. Actual precision rate will in fact be higher than 7.5%, depending on the final number of units per strata. If we were to increase confidence level (from 90% to 95%) with same precision level, we would need 171 units per strata which cannot be achieved with four strata and sample around 600. If we were to keep 90% confidence level and increase the precision at 5%, we would need 270 units per strata.
82
an equal allocation given that the objective is to make comparisons across groups and strata cells are large
enough for that. Analytical weights are used to compensate for the equal allocation, and weighted findings
are representative of the distribution of firms across regions and size provided in the business registry.142
Since sector is another domain of interest, we further stratified the sampling by three types of sectors:
manufacturing and construction, wholesale and retail, and services sectors.143 While we are not powered
to derive representative statistics at such disaggregated level (not region x size x sector level, nor the
region x sector or size x sector level), it will be possible to derive representative statistics at the sector
level (all regions together and all firm sizes together).
Note that ideally, we would like to be able to compare the four main strata with each other. However, to
detect even a 15 percentage point difference across strata at 90 percent power (assuming two‐sided test
and 50 percent prevalence, most conservative assumptions), we would need 227 units per strata. This is
not possible given our budget constraints. With the above sample of 480 firms, we are still able to make
comparisons between firms in Tashkent and other regions (all sizes pooled together), and we can compare
small firms with larger firms (all regions pooled together).
Finally, since we expected between 50 and 90 percent of non‐response rate in the phone survey, we
worked with a larger sample (3,000 sampled firms) to internalize the risk of non‐response.144 Firms were
randomly ordered per class and contacted in this order, to avoid the introduction of biases. The sample
has been drawn as shown in Table 5 (random sampling, 4 main strata, equal allocation across 12 classes
to introduce sectors). A targeted minimum of 42 firms had to be interviewed for each of the 12 classes to
achieve the required minimum number of units per strata.
Table 5 : Distribution of the firm sample provided to the survey firm
Small (<= 20 workers) Larger (>20 workers)
Total
Manufacturing
and
Construction Retail Services
Manufacturing
and
Construction Retail Services
Tashkent 250* 250 250 250 250* 250 1,500
Other regions 250 250 250 250 250* 250 1,500
1,500 1,500 3,000
*Note that during survey implementation, the provided list was exhausted for three classes. An additional sample
was randomly drawn for them.
142 Here, we have to assume that the business registry is representative of the economy and cannot correct for the possible flaws and biases in the registry frame. 143 Manufacturing and construction sectors correspond to NACE C and F. Wholesale and retail correspond to NACE G. Services sectors correspond to Transportation and storage (NACE H), Accommodation and catering (NACE I), Information and communication (NACE J), Financial and insurance activities (NACE K), Real estate services (NACE L), Professional, scientific and technical activities (NACE M), Management and support services (NACE N), Education (NACE P), Health and social services (NACE Q), arts and entertainment (NACE R), other services (NACE S). Agriculture, Mining industry, Electricity and Water Supply sectors (NACE A, B, D and E) were excluded from the frame. 144 Cold calling on a random sample of 120 firms from the registry suggested that only 8% of the phone numbers were going through. In the end, during the survey, a higher contact rate was observed since only 50.9% of the firms could not be contacted at all.
83
Response rate, tracking strategy, and final sample of interviewed firms
While the survey targeted a minimum of 480 firms, 560 firms have been interviewed given the larger
sample provided to the survey firm. Contact was attempted with 1,975 firms, which means that the overall
response rate was 28.4 percent. Refusal rate was relatively low (11.9 percent of contacted firms), and the
main reason for non‐response was the impossibility to establish a contact with the firm. (50.9 percent of
the firms could not be reached by phone and other attempts to find the firm unsuccessful.) This is due to
the low quality of the business registry, which provides the contact of the firms.
Table 6 : Response and non‐response rate of the firm phone survey
Total number of firms contacted : 1975
Interviewed 560 28.4%
Not interviewed 1415 71.6%
Refusals 236 11.9%
Partial interview followed by refusal 116
Strict refusal 120
Ineligible for survey 174 8.8% Household business which did not hire outside of the family since Jan 2019 9
Firm is permanently closed 165
Unsuccessful attempts to reach the firm 1005 50.9% Call never answered, other attempts to contact the firm unsuccessful 105
Contact number erroneous (wrong number or line does not exist), other
attempts to contact the firm unsuccessful 900
To limit the non‐response due to invalid contact numbers, the survey firm has put in place the following
strategy:
If the contact number was invalid or incorrect, attempts were made to find the firm using: internet
search, contact to regional or city khokimiyats/townhalls, contact to regional or city Chamber of
Manufacturers and Entrepreneurs, contact to tax authorities.
If the contact number seemed valid but the phone unanswered, at least three phone calls were
made at different times of the day for three days, followed by a three‐day break and again three
attempts. Then, the firm was searched by other means as described above.
In addition to the non‐response, another aspect had to be considered during the survey: once firms had
been interviewed, enumerators identified that some did not belong to the “size class” indicated in the
registry (small versus larger firms) or had changed activity and were now active in another sector. Those
firms were reallocated to their “correct” class when considering the final sample of interviewed firms as
below (Table 7).145
145 The reallocation across size or sectors is another indication that the business registry of firms is not updated. It is not straightforward how this can be corrected in weight computation while also weighting for business registry representativeness. Therefore, weights for the final findings do not account for that.
84
The final interviewed sample is presented in Table 7 and follows relatively well the sample equal allocation
across classes, with the exception of one class which is slightly overrepresented (larger firms in the
manufacturing and construction sector in regions outside Tashkent). This is adjusted when using design
weights. Response rates are highly heterogeneous across classes, in particular it is systematically higher
in the five regions compared with Tashkent. This can be due to a higher turnover of firms in other regions
and higher closures due to the pandemic, which would explain why we could not establish a contact with
those firms, but we can only make assumptions here. The number of interviewed firms per strata (region
x size) and per sector (separately) is high enough to derive representative statistics as detailed above in
the sampling strategy.
Table 7 : Distribution of the final interviewed sample and response rates
Small (less than 20 employees) Larger firms (20+ employees)
Total Manufacturing
and
Construction
Retail Services
Manufacturing
and
Construction
Retail Services
Interviewed : 560
Tashkent 43 43 44 47 42 43 Other regions 45 43 46 68 49 47 Contacted : 1,975
Tashkent 265 240 145 215 280 89 Other regions 168 64 87 95 282 45
Overall response rate (taking into account class re‐allocation) 28%
Tashkent 16% 18% 30% 22% 15% 48% Other regions 27% 67% 53% 72% 17% 100%
Sampling weights
The findings presented in this report are weighted estimates. To be representative of the whole business
registry, we applied design weights 𝑤 to re‐adjust the weight of each class (defined by region x size x
sector which is a total of 12 classes, as shown in the sampling table above) as well as non‐response weights
𝑤 based on the response rate per class. Each unit is weighted by the weight of its class.
Design weights (𝒘𝒄 ) : The weight for a unit in a given class 𝑖 is the ratio of total units in the class (based on cleaned registry) divided by the sample size of the class (based on above table). This
ensures that the distribution of the survey matches the distribution of the sampling frame
(registry). 𝑤 where 𝑝 is the size full of the population in the registry (for class 𝑖) and 𝑐 is
the sample size (contacted firms from that class).
85
Non‐response weights (𝒘𝒓) : The weight for a unit in a given class 𝑖 is the ratio of total number of
firms contacted divided by the number of firms interviewed. 𝑤 where 𝑐 is the sample size
(contacted firms from that class) and 𝑟 the number of firms who responded (interviewed).146
Final weights: therefore, the final weights for a unit in class i is 𝑤
146 Note that non‐response weights use non‐response computed over the contacted sample (at least one contact attempt). In the case of three out of twelve classes which required a replenishment after the first random list, while the second random draw was conditional on not being included in the first list, we do not account for that in weight computation (impacts to the estimates would be minor according to the statistician).
86
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